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E&M continues
D) Finally, decline of prices in this third
recession down through a line (the neckline) drawn across the bottoms of the
reactions between the left shoulder and head, and the head and right shoulder,
respectively, and a close below that line by an amount approximately
equivalent to 3% of the stock's market price. This is the confirmation or
breakout.
Under headline "Volume Is Important" E&M
continues ".. when we speak of high volume", we mean a rate of trading notably
greater than has been customary in that particular.
A scan of the pages devoted to H&S patterns,
including both a hypothetical "ideal" and real examples, shows a rough range in
bars from beginning to end of not less than 25 bars and as many as 100 or so.
While an oblique mention is made to time being required for a H&S pattern to
develop, and some importance is placed on the size and clarity of each
phase, there is no minimum cited.
Earl
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----- Original Message -----
<DIV
style="BACKGROUND: #e4e4e4; FONT: 10pt arial; font-color: black">From:
<A title=t-bondtrader@xxxxxxxxxxxx
href="mailto:t-bondtrader@xxxxxxxxxxxx";>t-bondtrader
To: <A title=realtraders@xxxxxxxxxxx
href="mailto:realtraders@xxxxxxxxxxx";>realtraders@xxxxxxxxxxx
Sent: Thursday, January 11, 2001 12:46
PM
Subject: Re: [RT] H&S on the
Bonds
Does this definition mention anywhere how many
bars (minimum) there should be to make up the pattern, or indeed, one or other
of the shoulders?
Bill Eykyn
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----- Original Message -----
<DIV
style="BACKGROUND: #e4e4e4; FONT: 10pt arial; font-color: black">From:
Earl Adamy
To: <A title=realtraders@xxxxxxxxxxx
href="mailto:realtraders@xxxxxxxxxxx";>realtraders@xxxxxxxxxxx
Sent: Thursday, January 11, 2001 6:59
PM
Subject: Re: [RT] H&S on the
Bonds
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
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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
<SPAN
class=120292502-11012001>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>
<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>
<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
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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
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