Don’t Always Expect Toilets To Flush After The Close
One of my favorite strategies is look for chart patterns that have been
developing for a long time. Such patterns often become as easy to predict for the trading public as a surge in toilet flushes after the close. These patterns are vulnerable to disintegrating. . .once enough people have been
suckered into believing in them.
Today, we had a nice example of this in EMC Corporation
(
EMC |
Quote |
Chart |
News |
PowerRating). At 11:22,
we reported the following in TradersWire:
11:22:29
EMC (EMC)
is hitting its highs for the fourth time in the past three months. Notice
how the previous bounces wasted little time sticking around at the highs; EMC
swung down after one or two days near the highs. Traders may be watching for
EMC to break from this old, worn-out pattern and stage an attack on new highs.
EMC is up 2 5/16 at 72 13/16 and has a
TradingMarkets.com
3-month RS ranking of 84.
It seemed to me that because the market as whole had been
bouncing around in a range and this pattern in EMC was obvious enough that it
would seem enticing as a bounce-down candidate, it was time to look for a
breakout. The range bound-market would have conditioned traders into the
expectation that individual stocks would remain range-bound.
That breakout occurred a few minutes after this post and and by
the final hour of trading, EMC had been has been up as many as 4 points, a
good play for short-term traders.
Until tomorrow,
Eddie