It is a textbook symmetrical triangle pattern. This chart sums up my outlook for the market right now...we could move up or down. I love the reward to risk on this pattern. The stock is currently right at a key support level. There is support from the 50 day moving average as well as the support line of the triangle. If it break this support, it could move down to the next support area around $60 to $63. If it break above the resistance of the triangle, it could move up to around $86. The key is to wait for the breakout (in either direction). A more aggressive trade would be to buy at this support (if it holds tomorrow) and place a stop below the 50 day moving average and support line. If the trade was stopped out, you could look to get back in and play the potential downside move with a put option.Thursday, August 27, 2009
NICE INTRA-DAY REVERSAL
The market was down early in the day, but managed to reverse nicely and finish up. Today's price action confirms my belief that we might have one more move up. The drop early in the day tested the August 7th high (resistance) and it held now as support. We will want to keep an eye on this level (around 1018 on the S&P 500). If we close below this area, it could stall the rally. A student (Alester R.) made me aware of a nice pattern. Look at the chart of RIMM. 
It is a textbook symmetrical triangle pattern. This chart sums up my outlook for the market right now...we could move up or down. I love the reward to risk on this pattern. The stock is currently right at a key support level. There is support from the 50 day moving average as well as the support line of the triangle. If it break this support, it could move down to the next support area around $60 to $63. If it break above the resistance of the triangle, it could move up to around $86. The key is to wait for the breakout (in either direction). A more aggressive trade would be to buy at this support (if it holds tomorrow) and place a stop below the 50 day moving average and support line. If the trade was stopped out, you could look to get back in and play the potential downside move with a put option.
It is a textbook symmetrical triangle pattern. This chart sums up my outlook for the market right now...we could move up or down. I love the reward to risk on this pattern. The stock is currently right at a key support level. There is support from the 50 day moving average as well as the support line of the triangle. If it break this support, it could move down to the next support area around $60 to $63. If it break above the resistance of the triangle, it could move up to around $86. The key is to wait for the breakout (in either direction). A more aggressive trade would be to buy at this support (if it holds tomorrow) and place a stop below the 50 day moving average and support line. If the trade was stopped out, you could look to get back in and play the potential downside move with a put option.
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Hi Jerry and Alester,
ReplyDeleteMy 2 cents on the RIMM symmetrical triangle is that it will break out to the down side. I think the price has already moved too close to the apex of the trianlge to break out to the up side. The way I drew the triangle shows the apex to be at about September 18th.
Also, just an observation, the March 9th to June 16th move up, corrected 38.2% by July 9th. It moved up from there until August 6th.
J.J. M