frugi said:Also a chance to take ...guess what? .... an early 1-2-3 short using some form of the Traders' Trick Entry.
frugi said:Pretty H&S Tim, certainly no retest of the neckline there. Was there news?
QUOTE]
Oh yes! Q3 earnings release :cheesy: In light of this, your short entry at the end of the day before the release might be too risky for many. On the other hand, if all that is known about a stock is encompassed in its price at any one time and the chart was already looking bearish the day before the release, is it not rather unlikely that the news will be the exact opposite of what is expected, possibly causing the price to do a u-turn and head north?
These are the earnings figures:
GRMN Garmin Ltd. Q3 2005 Garmin Ltd. Earnings Release $ 0.63 $ 0.67 $ 0.58
Interestingly, the actual EPS figure ($0.67) exceeded the estimate ($0.63) and last years figure ($0.58). One wonders what the price might have done had the earnings figures fallen short of expectations . . .
Thanks for the excellent analysis Frugi.
Tim.
chump said:H& S why does this work and why does it not work ?
When it works it is because the H& S pullback from the higher high is in this case a 1:1 retracement of the prior wave..this does two things...firstly it signals that a change of trend is more likely than not (this does not necessarily mean reversal ..it could be sideways and this is important) ,secondly it signals profit taking from the early trend instigators in conjunction with a pullback opportunity for the late arrivals again important.....the right shoulder however may actually form a trend reversal movement or still go into a trading range..this is not known for sure until the move is underway...if you take an entry on a one bar reversal in theory you take minimal risk on your entry...I would say if you take a small delay and take a stop entry on the break of the second bar back forming the right shoulder then you are even less likely to get whipsawed (I have not tested this statistically but have a look for yourselves) ..the caveat on this is the formation of that bar...entry on that bar should still offer 1:1 based on a 1st target at the base of the right shoulder...manage the trade by making sure you are at b/e quickly as the target approaches..two things may happen (but you will already have a good idea of probability by watching the way the bars form on the downleg of the right shoulder) ...one is it arrives at target but resistance forms and repels price back forming a trading range (the H& S failed ..there was still further buying to be done) ..second is it powers past that resistance and sucks in the stops from the former pullback entries of the latecomers..if it does the latter then 2nd target becomes the area for the breakout prior to the H&S and as this approaches either exit on a stop buy , or trail your stop on the high one bar back....there is another option based on a larger move for managing this but it depends on your timeframe..
Another slant on this is to look at the H&S in a larger context..if you think it is forming after one push up it is much more likely to become a trading range that signals the halfway point of the forthcoming move...if it forms as a third push up it is much more likely to be an H&S although end of trend distribution can sometimes come also via a sagging trading range which in itself belongs to a move from a higher timeframe. Again this reinforces the advice of a topdown view.
Good to see people just talking trading ideas without extraneous input.
chump said:W/C 16/9/05 transports down move stopped at prior level of accumulation. W/C 28/10/05 start of transports being marked up. If this really is a top reflecting the increase in short term rates that normally precedes same then we should now see the start of distribution of transports and the use of rallies to distribute to inflation busters in resources etc. If transport distribution takes out earlier lows of accumulation we should then see distribution of resources as the last lagging leg of distribution ,but whether that happens I would say depends on short term interest rate cycle.
Pick holes by all means I have no claim to 'rightness' on this stuff.
By the way when I say "see distribution of transports" that does not mean they not yet make a new high ,it just means that high will be in the wrong hands.
Hi Db,dbphoenix said:At what point would this channel be defined for you and at what point would you begin extracting that decent profit?
--Db
Well, if I had to make a call - with the benefit of hindsight - I would go long on the large bull candle of October 04 as it broke to new highs around the $32 mark.. August and September were both inside months, following the large bull candle of July which indicated that buyers have come out on top following a fairly even handled battle in June where the price spiked to new highs.dbphoenix said:Just wondering at what point a trading decision would be made using this chart.
dbphoenix said:Nice take on management. Knowing the behavioral dynamics can also be helpful, i.e., buying pressure propels the price into the first high, even more pressure into the second (greed). Then, when the TL is broken (important, otherwise the trader may end up trying to "catch the top" and make a series of counter-trend trades), those few who think this is yet another buying opportunity will push price into the last effort at a new high (hope), which of course fails (fear). Thus the pattern of transactions forms the same pattern as that of price. If one is using "volume bars", they should look the same as the price pattern: a high, a higher high, and a subsequent attempt which is not as high as the first.
All of this helps to ensure that the "pattern" succeeds. Without it, as you point out, one can often move sideways. The particular example provided here is an H&S in form but not in content since the "right shoulder" fails due to an event. End result is the same in this case, but without the event, the probability of moving sideways rather than plummeting is likely different than if the pattern is allowed to ripen naturally.
All of which makes real-time trading so much more challenging (the Fred Astaire approach to trade management )
--Db