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Strategies & Market Trends : How To Write Covered Calls - An Ongoing Real Case Study! -- Ignore unavailable to you. Want to Upgrade?

To: Tony D. who wrote (6414)	1/14/1998 4:23:00 PM
From: Douglas Webb	Read Replies (1) \| Respond to of 14162

I thought that when the trend changes for 2 days in a row, a new box would form. I was trying to figure this thing out but I ran into a couple of problems. CREAF closed higher on 11/12 & 11/13, it closed lower for 2 consecutive days, but no new blk. box. O 11/18 a new blk box is formed. The close is higher on 11/19, 20,and 21 but no new white box is formed. These are just a couple of examples where I lost the trend. Could you please explain? At the opening on 11/12, the last two bars were white bars, one extending from $26.750 to $28.125, and the second fromm $28.125 to $28.250. These bars were formed on 11/10 and 11/11, and defined an envelope from $26.750 to $28.250 (their combined low and high.) During the day on 11/12, Creaf broke the envelope at it's high of $28.375, but it closed within the envelope at $27.719, so no new bar was formed. During the day on 11/13, the high end of the envelope was broken, at the high of $28.375, and the low end was touched at $26.750. But, Creaf closed within the envelope at $27.438, so no new bar was formed. The same happened on 11/14. On 11/17, Creaf gapped open at $28.625, breaking the high end of the envelope. It also closed at $28.625, outside the envelope, so a new bar was formed. Since the break was on the high side, the new bar was white, and it extended from the previous high, $28.250, to $28.625. The new envelope was now from $28.125 to $28.625. On 11/18, Creaf broke through the low end of the envelope at it's low of $26.750, and it closed outside the envelope at $27.063. This caused a new black bar to be drawn from $28.125 down to $27.063. The envelope was now from $27.063 to $28.625. On 11/19,20,and 21 the closes were at $27.875, $28.00, and $28.188, all within the envelope, so no new bars. Does this help? The closing price has to be outside the envelope formed by the previous two bars for a new bar to be drawn. This new bar is what determines whether or not the trend is changing, not the other way around. Doug.