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Strategies & Market Trends : The Rational Analyst -- Ignore unavailable to you. Want to Upgrade?

To: Galirayo who wrote (1)	12/15/1997 7:20:00 PM
From: Cornstock	Respond to of 1720

Rainier, I am delighted to see this thread. Congratulations!!! I will check in often. I think this will be a great asset to TI - no a very great asset!!!! You do great work - and no hype whatsover. I think it will be a popular one. Hmm noticed a pretty good analyst posted first. Bodes well for you and for us.

To: Galirayo who wrote (1)	12/15/1997 8:16:00 PM
From: HeyRainier	Read Replies (4) \| Respond to of 1720

[ Welcome and Bull Trap/Bear Trap scans] Ray, With you being here I think I've pulled an Ace from my sleeve! I hope the thread grows in the right direction, but with you here I think the chances of that will be much improved. On a different note, I was thinking about what TA indicators you could use for the Bull Trap/Bear Trap scans. That's a tough one to put together, and I'm not sure just one indicator will be able to trigger that response. But how were you able to do the Ascending Triangle scans? Wouldn't a Bull Trap/Bear Trap scan also incorporate similar techniques that you've used with the A.T. scans? I do have another idea though: there's this feature on the software I'm using from Omega Research, SuperCharts, that's called a ShowMe study that might be able to hunt them down for me. I'll have to try and experiment with the programming soon. For now, I will just have to manually draw my trendlines on stocks breaking new highs, and will set an alert on them for any violations. Also, there may be another way we can use our resources here at SI to aid us in our search. The text finder at the bottom could help direct our attention to any of the observations from the 60,000 members here who happen to recognize the patterns. When I looked, however, it appears that not many people are able to properly identify just what they are. So let's get it right here: A Bull and Bear Trap falls under the category of a Failed Signal. Quoting from "Schwager on Futures: Technical Analysis:" "A failed signal is among the most reliable of all chart signals." (So you can see why I'm particularly interested in this phenomena. Higher reliability patterns can greatly tilt the risk/reward ratios in our favor in these circumstances. And it may be more reliable than the Ascending Triangle). Continuing (others should re-read it if they did not grasp it entirely): "...When a market fails to follow through in the direction of a chart signal, it very strongly suggests the possibility of a significant move in the opposite direction...The fact that such a retracement occurs almost immediately following the breakout suggests a "bull trap." Such price action is consistent with the market's rising just enough to activate stop orders lying beyond the boundary or the range, but uncovering no additional buying support after the breakout-- which is an indication of a very weak underlying technical picture. In effect, the immediate failure of the apparent buy signal can be viewed as a strong indication that the market should be sold..." I've seen some of the chatter here on SI and the incorrect observations of the presence of Bull Traps. The Bull Traps I like and most likely will only act upon are those near market highs (the possibility of an overbought/overvalued issue is higher here, which will hence make the potential fall even stronger). Some examples that I previously posted in your "Charts for Quick Cash $$$" thread: 1. The broad market experienced a Bull Trap in mid-October prior to the worldwide selloff this year. 2. The broad market also experienced a Bull Trap prior to the 1987 Crash. 3. CTXS experienced a Bull Trap as of 4 trading days ago, when the stock was at 80 . As of this writing, it is now trading at 65.() (by the way, Dave Horne was also becoming bearish on this stock as of the first week in December--he's good) 4.AMZN also had a Bull Trap at 56. It promptly dropped to 45 before reversing.() (*) : The fun thing about these issues is that you also got a confirmation from an RSI Divergence. Given the seeming effectiveness of the phenomena, it might not hurt to keep an eye out for these. Regards, Rainier