3SOF

Melf,

I was trying to keep in mind what you mentioned earlier abovut the bear flag having an uptrending slope.

TD update:

UYG
#1 at 29.11, open
#2 at 30.55, open
#3 at 33.45, open
#4 at 36.25, open
#5 at 34.56, open
#6 at 32.10, open
#7 at 32.05, open
#8 at 31.51, open
#9 at 30.58, open
#10 at 30.09, open
#11 at 29.12, open
#12 at 29.01, open
#13 at 28.71, open
#14 at 27.91, open
#15 at 27.66, open
#16 at 27.52, open
#17 at 26.47, open
#18 at 24.56, open
#19 at 22.23, open
#20 at 20.58, open

SKF

#1 at 144.44, open

Wasn't sure if SKF was going to bounce or breakdown on the uptrending rtl of the daily chart.
I took my chances and bought it as a hedge - price broke down below the rtl and closed as a bearish engulfing candle!

Oh well, I guess that's the start of my SKF "inventory"

Hourly chart showing price used the rtl of the yellow channel as support (for now).

Redrew the 5 minute charts of SKF and UYG.

SKF showing a red downtrending channel with price at the ltl of the pink descending channel.

UYG showing a red uptrending channel with price at the rtl of the pink ascending channel.

UYG closed as a bullish engulfing candle.

Will it test the ltl of the descending channel?

If it does, wil it bo or fbo?

We'll have to wait and see.

TD update:

UYG
#1 at 29.11, open
#2 at 30.55, open
#3 at 33.45, open
#4 at 36.25, open
#5 at 34.56, open
#6 at 32.10, open
#7 at 32.05, open
#8 at 31.51, open
#9 at 30.58, open
#10 at 30.09, open
#11 at 29.12, open
#12 at 29.01, open
#13 at 28.71, open
#14 at 27.91, open
#15 at 27.66, open
#16 at 27.52, open
#17 at 26.47, open
#18 at 24.56, open
#19 at 22.23, sold at 24.36
#20 at 20.58, sold at 23.34

SKF

#1 at 144.44, open

Copy of what I posted at the UYG yahoo message board:

UYG closed above the Weekly 8ema and backed off the daily 50sma.

What does this mean?

Time for some more bulls to look for a set-up on the daily chart for a long entry?

Is it better to wait for a pullback on the daily chart?

What if it gaps up?

Will be posting charts at 3SOF.

Looking forward to your comments.

Not sure, but there looks to be a head and shoulder on the hourly chart of SKF.

Need a chartist's second opinion.

The measured move of the head and shoulder pattern and the Fibonacci extension both seem to be pointing at $65?

211.75(swing high/head) - 146.76 (swing low/left neckline) = 64.99

130 (swing low/neckline) - 64.99 (height  from left neckline to the head) = 65.01

The 100% Fibonacci extension is at roughly 65.20

TD update:

UYG
#1 at 29.11, open
#2 at 30.55, open
#3 at 33.45, open
#4 at 36.25, open
#5 at 34.56, open
#6 at 32.10, open
#7 at 32.05, open
#8 at 31.51, open
#9 at 30.58, open
#10 at 30.09, open
#11 at 29.12, open
#12 at 29.01, open
#13 at 28.71, open
#14 at 27.91, open
#15 at 27.66, open
#16 at 27.52, open
#17 at 26.47, open
#18 at 24.56, open
#19 at 22.17, open

SKF

#1 at 144.44, open
#2 at 121.43, sold at 127.16

I bought UYG at 22.17 so that I could hold the SKF I bought at 121.43 to my hourly target between 130 and 135 but I ended up selling too early.

I used the 5 minute "yellow" ltl instead where it backed off around 127s then went up to the hourly targer (which was the red ltl).

This is the 5 minute chart that has the yellow ltl (should have sticked with the hourly chart - oh well).

Recently added the 200 and 50 sma with an 8ema on the TOS daily chart.

If I had that 200 sma right there before, I may have considered entering earlier.

Price is currently below the 50sma and 8ema and still above the 200sma.

My new project is to watch out more for "trendline validations".

Quote from Melf's response at the yahoo UYG message board with July 22, 2008 as the subject:

(I was trying to keep in mind what you mentioned earlier abovut the bear flag having an uptrending slope).

Good Morning, Jegejig,

That was fine to draw the upward sloping parallel line after the flagpole to see if the upper trendline of your flag would get tagged, but the SKF never made a second move up to the top of flag for the "higher high," so it wasn't a flag.

At the bottom of your flag, look at all of the candles that went above and below that trendline. The market didn't respect it, either as support or resistance, so it isn't useful information, nor is it a valid trendline.

" When we connect two data points and call that a trendline, it might end up working out, but we don't really know if it's significant until THE MARKET tags it and bounces off it. That's called "trendline validation." Again, it might still work without the validation and a pattern target might get MADE, but if price goes above it...below it... above it... below it, it clearly isn't usefu, nor is it a valid trendline."

Ty Melf.

ps. I purposely didn't copy the last paragraph (coz I'm hoping to see more of your post in there).

If not, I respect your decision.

Keep in touch

SKF daily chart showing price bounced off the 200sma but pierced below the 61.8% retracement of the 211.75 high and 66.37 low.

(The Fibonnaci level showing on the chart has a high of 211.66 and low of 66.16 coz I can't seem to align it well with the 211.75 high and 66.37 low)

Isn't a retracement below the 61.8% considered weak?

Price recently broke below the red uptrending rtl and had a bearish engulfing candle with that.

Price is also currently below the 50sma and 8ema.

Wondering if price will "tag" the uptrending rtl for "trendline validation".

We'll have to wait and see.

Added some notes on the SKF daily chart.

I just finished watching the video of inthemoneystocks.com.
http://inthemoneystocks.com/Day_Trading_Archive_and_Vid.html

I can't remember who sent me the link.

Thank you to the trader that sent it to me coz I like it.

Attached is my recent annotation of SKF's daily chart.

Yesterday, I thought the uptrending rtl of SKF was "tagged" already.

However, after redrawing the lines, it looks like it hasn't been tagged yet.

The yellow 9sma (kept the default simple moving average of TOS instead of changing it to the 8ema of Josh Lukeman) may be acting as resistance along with the red rtl.

I added 100 and 50 linear regression lines with RSI2.

So far price closed below the 50 sma and still above the 200sma

It also looks like price went out of the descending trendline of the tape (line drawn from the highs of the two candles - the high of 211.75 and high of 198.38).

Yellow lines as possible sideway parameters?

Here's what I will be looking at on monday:

3 multiple timeframes of SKF (daily, hourly, and 5 minute charts) with Linear regression and RSI2.

I will keep the 4th chart as my "workshop" where I will be drawing manual trendlines.

SKF multiple time frames in the "workshop".