Broaden Your Scope

• May 25, 2001
• Duke Heberlein

Sometimes there is more to a pattern than simply being a setup. Often, when
you look at the chart as a whole, taking in the previous action before the
pattern, you start to like one chart out of two with similar short-term
patterns, better than the other.

Celgene
(
CELG |
Quote |
Chart |
News |
PowerRating), profiled this morning, is a biotech stock with a 3-month
relative strength rating of 86 from TradingMarkets.com. As we reported
yesterday, the Biotech Index
(
BTK.X |
Quote |
Chart |
News |
PowerRating) has been exhibiting strong
momentum to the upside, gaining more than 250 points off the March low.

 

 

Celgene caught my eye in today’s trading after I recognized it
as a Lizard, selling off but then rallying back upward to the top of its range.
Closer scrutiny of the chart, however, lends more credence to the argument for
continuation to the upside.

 

13:09:39

 Celgene (CELG)
appears to be exhibiting a continuation signal, tracing out a Lizard in today’s
session. This is following the angular Rule of Four breakout and the failure
from a head and shoulders pattern. CELG is up 0.34 to 27.04 and carries a 3-month
relative strength rating of 86 from TradingMarkets.com.

 

 

Prior to this recent activity, CELG has broken out over a
declining triple top, a Cooper angular Rule of Four breakout. The fact that the
bearish head and shoulders failed to sustain itself after a break to the
downside is further evidence that it is continuing to build momentum. If CELG can
continue over the top of the head and the first top in the downslope, very
little resistance remains overhead on the road back toward the $65 level.

Practice your chart reading, finding a pattern or setup, then
walk backward two or three months. Look at what track the price action took.
Where were the volume spikes and declines? Are there occurrences that play out
more than once? Learn to look at what happened before the setup, and you should
start nailing down some more winners.

Have a great holiday weekend!

Duke

J. Marquis

J, you are quite welcome. You can thank our resident candlestick
guru Tsutae Kamada for that particular setup. Glad to hear that you are making
use of our service.