This Is What I’m Looking For As A Correction Signal

  • June 4, 2003
  • Derrick Hobbs


I opened this box of worms,
so I’ll follow it all the way to the end with you folks.
Lennar
(
LEN |
Quote |
Chart |
News |
PowerRating) in the homebuilding sector put
in another strong day today (Wednesday). Unfortunately I was not long the stock
today to participate in it. The last few columns I have been discussing the
likelihood for a reversal trade opportunity and that I was waiting on a
structural/pattern oriented trigger to take me into the trade. Well, below is
the structure I was looking for.

My plan is quite simple:

  1. Take a short trade tomorrow
    (provided no crazy gap openings develop)

  2. Place a stop above the 60
    minute chart resistance zone.

  3. If that resistance zone is
    broken I will be stopped out of my short trade

  4. At the same time I am stopped
    out I will reverse the trade long. Why? On the second chart below on the
    weekly picture you’ll see that there is an Air Pocket up to the 76 price
    level.



That is as far as I’ll go with
the trade tonight, but the plan is in place.

Housekeeping items from my

May 21 column:


General Market Comments: I am carefully watching the lower time frame
corrective declines in this up trend. Once symmetry is broken on the daily time
frame pullbacks, this will likely be an early signal of a deeper corrective
move. More to come on this in later columns.

Have a great night.


Derrik Hobbs