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E&M 6th ed page 64 on "The Head and
Shoulders"
A. A strong rally climaxing a more or less
extensive advance, on which trading volume becomes very heavy, followed by a
minor recession on which volume runs considerably less than it did during the
day of rise and at the top. This is the left shoulder.
B. Another high volume advance which reaches a
higher level than the top of the left shoulder, and then another reaction on
less volume which takes prices down to somewhere near the bottom level of the
preceding recession, somewhat lower perhaps or somewhat higher, but in any case
below the top of the left shoulder. This is the head.
C. A third rally, but this time on decidedly less
volume than accompanied the formation of either the left shoulder or the head,
which fails to reach the height of the head before another decline sets in. This
is the right shoulder.
Thus E&M does not agree that the volume on the
right shoulder is not compared relative to the volume on the left
shoulder.
Earl
<BLOCKQUOTE
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----- Original Message -----
<DIV
style="BACKGROUND: #e4e4e4; FONT: 10pt arial; font-color: black">From:
Steven W. Poser (psn)
To: <A title=realtraders@xxxxxxxxxxx
href="mailto:realtraders@xxxxxxxxxxx";>realtraders@xxxxxxxxxxx
Sent: Wednesday, January 10, 2001 7:40
PM
Subject: RE: [RT] H&S on the
Bonds
Earl
-
<SPAN
class=120292502-11012001>
<SPAN
class=120292502-11012001>While I agree with you that the pattern is too small
to call it a h&s pattern, at least as defined by E&M, the volume
pattern that you discuss is not a good argument only because volume can rise
on the right shoulder from days between the head and the right shoulder, as
long as it is lower than at the head. For that matter, the volume I show on my
chart for 8-Jan was the lowest since the high anyway to that point. It looks
as if your charts show previous day's volume beneath the current bar (see my
chart attached). The low volume on the left shoulder is at least partially
because it was pre-Christmas (wasn't the 22nd a shortened day?). Note also
that volume properly increased as prices fell the next day. The volume pattern
looks even better in the benchmark 10Y futures (though the left shoulder is
still low).
<SPAN
class=120292502-11012001>
The
most incorrect thing about calling this a H&S is that it is no place near
being confirmed. The neckline is one of those ugly downward sloping ones. It
comes in tomorrow near 103:20. The measured move off the high will be about
2:14, so we will get the signal more than 1/2 to the target. Not a great
risk/reward. There are much better patterns and indicators that would have
told you to be short than this possible H&S.
<SPAN
class=120292502-11012001>
One
thing that I strongly believe in is that the requirements that E&M put on
patterns as far as length go are not useful. These patterns also show up, and
seem to be reliable, even on an intraday basis. Of course, as an Elliottician,
I think all patterns can work even down to very short time frames. It is a
bias I have and a cross that I have to bear.
<SPAN
class=120292502-11012001>
<SPAN
class=120292502-11012001>Steve Poser
---Steven W. Poser, PresidentPoser Global Market
Strategies Inc.<A target=_blank
href="http://www.poserglobal.com/";>http://www.poserglobal.comswp@xxxxxxxxxxxxxxxTel:
201-995-0845Fax: 201-995-0846
<FONT face=Tahoma
size=2>-----Original Message-----From: Earl Adamy
[mailto:eadamy@xxxxxxxxxx]Sent: Wednesday, January 10, 2001 9:09
PMTo: RealTradersSubject: Re: [RT] H&S on the
Bonds
I've previously reminded TBT of the required
qualifications for a H&S with E&M and Curtis Arnold references
to proper identification of H&S patterns but he keeps throwing these
things up as H&S. For the benefit of new traders on the list who
pickup such misinformation and try to use it to their financial peril, I
have attached a GIF which shows what disqualifies this as a H&S. The
idea is simple - high volume on the rally into the left should
indicates buying while low volume on the rally into the right shoulder
indicates lack of buying. Finally, the pattern here is much too
abbreviated (too few bars) to qualify as a H&S.
Earl
<BLOCKQUOTE
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----- Original Message -----
<DIV
style="BACKGROUND: #e4e4e4; FONT: 10pt arial; font-color: black">From:
Don
Ewers
To: <A title=realtraders@xxxxxxxxxxx
href="mailto:realtraders@xxxxxxxxxxx";>realtraders@xxxxxxxxxxx
Sent: Wednesday, January 10, 2001
3:45 PM
Subject: Re: [RT] H&S on the
Bonds
Bill,
I noticed that too, but as another astute investor (Earl) saw the
volume on the right shoulder is larger than on the left, so be careful
about this "topping pattern" and getting too bearish. Could just be
a minor wave 4 of big wave 3 (not a big wave 4) in a continuation pattern?
Minor 4's screw more trades up, I have learned to respect them (Vs
predicting a big wave 4).
don ewersTo unsubscribe from this group,
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