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LULU our number 1 leader of any size, broke off the up trend with a little gap lower on Friday July 9. Today LULU bounced off of it's lows in very low volume. Fridays breakoff came on volume greater than any day in the previous 10 days. This would be the reverse of Dr. Kacher's Pocket pivot volume. In a late stage run, this sort of action is plenty to move me out of the long side. Being correct on the C call seems to confirm my downside bias.
Two gaps lower in MA, seem to indicate a consolidation perhaps to the 20 day or 50 day. MA's follow on accumulation came very late - 5 days after the breakout and very extended. Usually winning follow on accumulation will show up by day 3 or maybe day 4 after the breakout. See SINA on 1/6 and 3/30 or LULU 6/23 and 6/30.
Whoops that was follow on accum in LULU 6/23 and 6/27 and 6/28
I like your technical analysis and learned some things for my own future chart reading. However, it all it proved was that LULU has held up better than the market and shown much relative power warranting a longer term hold or accumulation i n the face of a weak market. Anyone who has held the stock and watched it daily for sometime is well aware of that phenomena. This is and I expect it to continue to be one of those big, big Model Book stock winners. Nice Post Analysis. Wish I was as disciplined.
I would say if you are going to draw that type of trendline for trading purposes you should use the weekly logarithmic chart as WO writes in his book. In this case LULU did not violate the upper trendline so not a sell signal. I sold half of my LULU on 6/28 and the other half on 7/8. I just don't like the fact that there is a lack of energy in the break outs of UA and DECK. No volume and they are now under their pivots. That is a cautionary sign for me. Also looking on YAHOO the forward EPS doesn't look that great for LULU. These are all great companies and great stories but LULU is too loved for me. Any glitch in other retailers and the stock will come down. I'm generally nervous about this EPS season and went mostly to cash today and shorted LVS and CSX.
SOLR is a nice example of a channel that was violated. I sold over half near the top of the channel and the rest this morning. It has fallen 15% in two days. ARMH is another example of a channel violated where I sold above the channel. these channels need to be respected!
Way to go Tuscon. Thanks for the WON weekly logorithmic distinction. LULU not yet an upper channel breakthrough sell signal. Still your shorts are nudging correctly along with SOLR, ARMH, & C
Abe & Tuscontrader: Just another note on trendline rules. Per WON via IBD staff: trendlines should be drawn on weekly log charts (as Tuscon said) and extend over a minimum of 18 wks duration with a minimum of 10 wks between points 1 & 2 and 8 wks b/n points 2 & 3. I have found this very useful as I, being oh so human, could draw trendlines somewhat selectively allowing me to, subconsciously, set the points to encourage whatever emotional outcome I hoped for in a given trade. This rule allows me to have objective set points and therefore more confidence in the findings of said lines and the price/volume action surrounding them. Brad
Somewhere I missed the time frame for drawing the lines between points 1, 2, &3. Is there a printed reference that you are aware of for this? Thanks.
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