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 December 9, 2003
Commentary-
Today was pretty exciting for intraday
trading for about the first hour and a half, and then the market went to sleep
awaiting the Fed decision. Once the decision was announced, the market did its
usual herky-jerky response, before setting down to some serious trending
action.
The bond market didn't like the announcement at all. I wonder what
that market was hoping for? I noticed something developing right before the
announcement, and I hurried to get a grouping on the chart of the three most
critical numbers. Let's look at a 15-minute chart of the bond, showing the
grouping, and what happened.
The critical number, which is hard to see in
the grouping, was a .786 retracement off of the peak. The pattern came together
with a near perfect alternate ABCD and a 2.236 BC leg external retracement.
It's amazing how the bonds went straight up on the announcement, right to this
point, and then tanked. It was a 'coincidence', right?
Let's review
a few of the potential trades that I have been showing, and then I'll show you
a new one I'm watching. Recall how I said that the pattern shaping up in silver
was a beautiful thing to look at, but that I just didn't think this market was
going to stop going up. I was watching for a potential very short-term trade if
there was a reaction off of the 'retest' of the grouping. I also noted that if
this pattern didn't hold, it would tell me something just as important as if
the pattern did hold. Let's see what silver did today.
Now that's what I call no respect. I didn't
get any kind of a trigger on the 'retest', and silver just blasted off. I was
thinking that this was the most likely scenario, and it played out. Now I know
where silver and the other precious metals stand. Gold was over $410 today, for
example. Now I start to look for trend continuation techniques on this
one.
Let's take a quick look at AMLN on a daily, with the
groupings.
AMLN is
rolling down nicely, and it's still in a watch and wait mode. I'll keep a close
eye on it, and do any updates in this column, as necessary.
Let's close
with a look at something I'm watching with great interest. I noticed a double
pattern setup forming in VTSS on a daily. Both patterns converge in just about
the same area. There are some other things going on here, too. See of you can
spot any of them. Let's look at the chart.
It was a bit difficult to outline both patterns and
retain the clarity, but if you study the chart for a minute, you should be able
to see both of them. I only put two key retracements on the chart to point to
the area that I'm watching. You'll have to construct your own groupings on this
if you want to watch it more closely. I find VTSS to be incredibly harmonic.
I've found great trades from the 3-minute chart all the way up to the weekly
chart on this stock.
My plan on this is the same as
always. I'll watch it and if it gets to my groupings, I'll look for an entry trigger. If I get one, I'm
in. If not, I'll just let it slide by. It makes no difference to me how many I
have to watch to get the convergence of factors that I need for my 'Trading
Plan'. In fact, that's a great way to think of it. Just like patterns complete
at convergences of Fibonacci numbers, I only initiate trades when the factors
in my 'Trading Plan' converge, too.
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