subject: No Losing Trades Plus A Horrifying Pattern On The Nasdaq [print this page] A rather important pattern that I think you need to check out has developed on the Nasdaq.
Going back to the July period of 2008 you are able to draw three circles above the highs of a distribution pattern. The main reason I it is known as a distribution pattern is that officially, it's not a Head and Shoulders or any other pattern. By evaluating the pattern nevertheless, we do note that it's a distribution pattern that results from profit taking and shorting.
The three circles may be sketched spanning a strangely identical pattern that started in January of 2010 and that ended last week.
So if we perform a trade triangle layover you will notice that we have had a down monthly triangle. The reason that this is so significant is that the monthly triangle is utilized to ascertain the long term trend which is down. Exactly how precise is the monthly trade triangle? Looking at the stock chart you can see that every monthly trade triangle since April of 2008 has been accurate. Implementing my Guerilla Stock Trading strategy of a 5% to 10% gain and also a 5% stop loss, we'd have made money on every monthly trade triangle signal since April of 2008!
The weekly trade triangle is still up meaning the monthly trend and the weekly trend are in disagreement. The question you'll want to contemplate all boils down to whether the longer monthly downtrend will pull the weekly trend lower, or if the weekly trend has turned positive first and the monthly trend is soon to follow.
I believe the case for a downward swing like the sort we had back in 2008 when this pattern formed is a bit more likely. The main reason, beyond the point that the larger trend trumps the shorter term trend, would be that the U.S. government came out last week and all but officially announced the economic recovery is now dead.
The brand new crises we now have is the fact that with so many individuals out of work, state budgets need to be cut. The cuts necessary are so extreme that in certain government sectors, 50% of the workforce has been laid off.
Perhaps Caroline Baum of Bloomberg News said it best: That which you had was a government-prescribed course of amphetamines (to keep it up), antibiotics (to counteract infection) and antidepressants (to really make it feel better). It endured frequent steroid injections from both monetary and fiscal authorities. And it continues to have no genuine muscle tissue.
by: Joann Parker...
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