3SOF

Quote from: usedcasting on March 04, 2006, 09:50:22 AM
How well does CTE look here.
Thanks

Hey, uc! 

It looks "just okay."  You've got the right idea.  Applause.

I think we need to review the definition that Basonista gave us on page one, so that we understand the psychology behind the Ascending Triangle, like we did with the Wolfe Wave (Suggestion: Go back and read it).

With the Wolfe Wave, the key element, in my view, is the "imbalance" at Wave 5 (it's either a false breakout, or a false breakdown).  The proverbial "everyone" is caught off balance, on the wrong side of the trade.

When the stock comes off the Wave 5 "fakeout," then breaks out on the other side of the Wolfe Wave and starts heading to the Wave 6 target, it is obvious what's happenening, "Everyone" says, "Aw-w, crap!  I'm on the wrong side of this trade!"

The way we can tell that's what is going on, is that the stock has an almost violent move to the Wave 6 target on good volume.  The stock "over-corrects" in the other direction because of the imbalance, when "everyone" was on the wrong side of the trade. If it doesn't do that, the Wolfe Wave is very suspect, like SIRI.  I should have recognized that when it spent three days back inside the pattern.  That was a mistake, and I paid for it.  Good lesson learned.

What is the psychology behind an Ascending Triangle?  What would make it obvious to us, what is going on?

Let's look at the sample "ideal Ascending Triangle" that I've drawn on the chart below (scroll down and take a look at it before you read this explanation):

1. That's the first data point at the FLAT top of the triangle, at $50.  We just don't know that yet, when it occurs.

2. First low, at $10

3. The stock rallies back to $50.  Double-top. 

4. Second low at $20.  It's a "higher low."  If buyers want the stock, they can't have it any more at that first low of $10.  They have to "pay up" for it, at $20.

5.The stock rallies back to $50 again.  Hmmmm-mmm... now it's looking like a very nice Ascending Triangle.  If it breaks above $50, that's a vailid breakout.

6. But it doesn't break out.  It sells off, but this time the stock sells off only to $30.  If buyers want it, they have to "pay up" again. (notice how the pattern is "coiling" back toward $50, like Basonista explained in his definition).

7. Heading back up to $50 for the fourth time, it is obvious that some buying should happen if that finally gets taken out!

There's no resistance above $50.  "Everyone is aboard" as successively higher lows were made (the "coiling" ascending line), and we're "good to go" on the upside.

BREAKOUT!!!!!!!

8. You don't always get this pullback to the breakout, but it's often a GREAT entry.  A successful re-test tells us that those who bought below $50 do not want off the train, and that it's very likely that the upside target is going to get MADE, or darned close to it.

9. Target: $90.

High of the pattern (50) minus the low (10) = 40 points.  50 + 40 = Target: $90 IN PLAY.

Granted, this is an ideal pattern, and they are hard to find, but the main point I want to make is that with a good Ascending Triangle breakout, it should be obvious that something good ought to happen on a breakout above $50.  We know exactly what we're looking for.

Next, I want to go back to Calven's PGN chart, to address the is it obvious issue, then I'll comment on your CTE chart.

Quote from: Melf Elf on March 04, 2006, 12:24:06 PM

Next, I want to go back to Calven's PGN chart, to address the is it obvious issue,

1. The most recent highs in PGN are 46.10 and 46.00, giving it that look of a FLAT top that we want in Ascending Triangles.

2. There isn't a "coiling" Ascending trendline.  In fact, after the secondary high at 46.00, the stock made a "lower low," rather than the required "higher low."

3. If PGN takes out the highs at 46.00-46.10, does it look obvious  that the stock "should" take off to the upside?  I'd have to say no because there's immediate resistance just overhead at 47.95 - 48.00 from the last failed attempt to break out of an Ascending Triangle (pattern in red).

Calven and I disagree on this one being an Ascending Triangle, but I know that he feels as I do:  how nice that we all can disagree with each other, and do it in an objective, respectful manner.  I have a great regard for Calven's work, and he knows that.  We don't compete with each other, but rather, try to help, which is how I feel about the rest of you. 

That said, while I don't see PGN as an Ascending Triangle, this chart still has upside possibilites. There's a down trendline coming off the last high of 46.00 (Green line).  If you connect the recent lows (I forgot to draw it), it's a Symmetical Triangle. 

PGN could run quickly to 48.00 if it can take out the top of the Symmetrical Triangle pattern, and go beyond that if it can take out 48.00 resistance.

DRAT...I put up the wrong chart again.   

I added the up trendline of the Symmetrical Triangle.  Basonista made a comment earlier in this thread about patterns that go beyond 2/3 of the way toward the apex failing.  In my experience, I find that to be true.

The closer you get to the apex (where the two trendlines meet), the less likely it is that the stock will break out.  PGN is getting close to that 2/3 point, if it isn't there already.

uc,

Back to CTE...

1. I wouldn't start the Ascending line where you did.  That isn't part of the pattern, which begins coming off the first high (see chart).

2. There was an Ascending Triangle in the middle of the chart.  It only has one data point at the top of the pattern, but it's still valid.  I'd consider it a "weak" Ascending Triangle, but those targets often make, or come close. 

What validates that the pattern was meaningful was the successful re-test of the breakout (2.82), within two pennies (it pulled back to 2.80, then rallied toward the target).

What validates that it was a "weak" Ascending Triangle breakout, is the fact that CTE fell quite short of the  pattern target of 3.81.  It only got to 3.60.

3. The recent action looks like it could be an "A-B-C" correction (see drawing of what that looks like at the bottom of the chart).

If it is, and if "C" ends with a tag of the Ascending line, that could be quite nice.  It would validate that trendline (third hit to the trendline), and give us that "higher low," coiling aspect that we want to see in Ascending Triangles.

The up trendline comes in on Monday, March 6, at roughly 2.515, and rises 0.00582 per day, if you want to watch it.

As the chart stands, Friday was the first close back below the Ascending triangle breakout above 2.82 (Friday's close was 2.73).

EDIT: Friday's close was 2.75.  The low was 2.73.

That "could be" a double bottom with the February 14 low of 2.70 (Point "A" on the chart), or it could print something near 2.70 on Monday, then rally.  If it doesn't hold here at 2.70-ish, it looks like it will test that up trendline (Blue "3" on the chart).

Good luck if you have this one, uc!

Note To Everyone On The Thread: I rarely have the time to post in the amount of detail that I have today, so please don't be offended if don't respond or comment in depth to your posts.  I appreciate everyone's efforts, and wish that I had more time. 

Soo-oo many charts...so little time. 

Thanks for the detailed review Melf. (App)

Cheers
uc.

Quote from: usedcasting on March 04, 2006, 02:03:26 PM
Thanks for the detailed review Melf. (App)

Cheers
uc.

uc,

You're quite welcome.  You have been so kind to me these last months,  and so sincere in your studies of the market,  it was well worth my time.

Analyzing a chart is an entirely different exercise from actually "playing the chart," and the latter is MUCH, MUCH more difficult, as we all know.  If it were any easier, we'd all be billionaires.

Let's talk about that. 

Do we have a play in this stock?

Where would we enter?

Why would we enter?

Where is our stop?

What is the risk: reward ratio?

In my opinion, if we can't answer those questions, we'd do better to go to Las Vegas, where at least we'd have a good time, see some shows, and have some nice meals, etc.

"Throwing your money" at the stock market, without understand what you're doing, or why you're doing it, is a deadly game.  I played that game, so I know what I'm talking about.  VERY painful, financially.

That's why I'm so demanding about stocks performing after I enter. 

That's why I'm "picky" about how trendlines are drawn, etc.

That's why I'm ruthless about stops.

That's why I invested in Metastock, and the cost of downloading data from Reuters.

When that bell goes off in the morning, "You're going to have to take me down, if you can.  You are NOT going to take my money, without my at least understanding WHY you took my money.  I'm prepared, and I know what I'm doing, and why I'm doing it."

While that might over-confident to those who don't know me, uc, you know me well enough to know that I am COMPLETELY HUMBLE about the market.  If I'm stopped out, I'm stopped out.  Take the loss.

If we think we know more than the market does, we will get humbled real quick.

Be confident.  Don't get cocky.

Back to your CTE....

Trading Possibility #1:

If I were playing it (and, I might), I would buy IF it forms a "W" bottom here at 2.70-ish, then takes out "B" on my chart above.  "B" is 3.17.  I'd want to see a print of 3.18 to enter.  Stop: Below whatever low we make here in the 2.70-ish range.

Trading Possibility #2:

"Go For It" if we tag the up trendline of the Ascending Triangle, at #3 on my chart (roughly 2.52), but be absolutely ruthless about stopping the trade out on a close below that.

That  isn't a validated trendline yet.  We have only two data points, and we can connect ANY two data points and call that meaningful, but it isn't meaningful unless THE MARKET bounces off there, telling us that it's meaningful.

We don't TELL THE MARKET.  The market TELLS US.  Again, be humble.

Trading Possibility #3:

Wait for the actual bounce off that up trendline.  We'll pay a higher price, but it's a safer entry.  Same stop.  A close below that trendline.  If the up trendline doesn't hold, it isn't valid, and we're caught "hoping the stock will go up," which is "loser mentality."

Stop "hoping."  If THE MARKET tells us that up trendline isn't support, get out.  It's a tiny percentage loss, in comparison to what we stand to lose when support gets broken, and when we "hope" that the market will save us.  The market seldom "saves us" from our poor decisions.

Here's the chart again.  Good luck with whatever you decide, uc. 

Quote from: Melf Elf on March 04, 2006, 06:32:58 AM

Quote from: calven on March 03, 2006, 04:37:20 PM
Melf could I get your thoughts on HEC and AES as ascending triangles?

Cal,

Neither of those is an Ascending Triangle. 

I'd stick to what you said about Wolfe Waves: "If it doesnt look like this chart (the example you posted of an Ascending Triangle back on page 1 or 2), it isn't an Ascending Triangle."

The top really needs to be "almost" exactly flat, and the lows need to be "ascendling."  HEC, for example, looks more like a rectangle. 

There's some wiggle room with the "flat" top, like on the GTE chart where the highs were about ten cents apart, but the overall pattern should be obvious, like Statement00's short-term Ascending Triangle, otherwise, we're "seeing Ascending Triangles that simply aren't there," like we were doing with Wolfe Waves. 

"If the top of the pattern isn't obviously FLAT, it isn't an Ascending Triangle."

"The Ascending line should have the 'higher high' coiling look to it."  (On some of the charts we've looked at, like HEC, the Ascending trendline has been much too flat).

Mind you, that doesn't mean that any of the stocks presented in this thread aren't going higher.  They just aren't Ascending Triangles.

Hmm- I respectfully disagree with your thoughts on HEC...

PBV bars on the left side of that chart indicate a clear upper resistance leve - and the upsloping trendline looks solid as well with one exception...the one being the drop to the 200 day MA which is likely to happen on a BB stock that is thinly traded and easily manipulated.

I respect your opinions on PGN not being an ASC TRI but please go back and look at a 4 year chart. The ASC TRI I see is 4 year not 1 year....

Maybe my charting application is the issue. When I look at this chart: http://stockcharts.com/h-sc/ui?s=PGN&p=D&yr=3&mn=11&dy=0&id=p69144511974

i see the ascending triangle, yet when I use scottrades charts I see where you are coming from....hmm I gotta think a bit more about this...

If you start PGN from April 03 to present you see the ASC TRI in www.stockcharts.com

Thanks
cal 

Quote from: calven on March 05, 2006, 12:11:44 AM
If you start PGN from April 03 to present you see the ASC TRI

cal,

I still don't see this as an Ascending Triangle, so we'll agree to disagree. 

Going back to April, 2003, I see an Ascending Triangle Pattern (in red) that failed in late April, 2004, when the the stock closed below the ascending trendline (red arrow).

Three weeks later, PGN put in a low at 40.09.

Since then, for the past two years, PGN has been trading in as near-perfect a rectangle pattern as we're ever going to get (pattern in blue).  Both the highs and the lows are only ten cents apart.

Let's say we get a print next week of 46.11. 

That's a technical breakout of the two-year rectangle (pattern in blue), but we've still got overhead supply (resistance) to deal with between 46.11 and 47-95-48.00, the highs of failed Ascending Triangle (pattern in red).

In other words, anyone who bought this stock two years ago above 46.00 and hasn't sold it during the two-year rectangle formation represents a potential seller (overhead supply) on a breakout at 46.11. 

The psychology of those sellers is, "Thank gawd, I finally can get out of this thing at a break even."

What's mitigating about that, though, is the fact that PGN only traded above 46.00 for a total of about 11 weeks back in 2003 and 2004.  That's not much overhead supply, and a lot of those longs probably have thrown in during this two-year rectangle pattern. "The farther away resistance is in time, the less of a factor it becomes." 

Still, it might be a "bumpy" breakout of the rectangle until that overhead supply between 46.00 and 48.00 is worked off.

Overall, this isn't a bad-looking chart at all, cal, and it could do real well if it takes out 46.10 and 48.00 resistance.  Good luck if you decide to play it.

Quote from: calven on March 05, 2006, 12:06:08 AM
Hmm- I respectfully disagree with your thoughts on HEC...

No problem, cal.  I'm glad that we both agree to disagree with respect, and our kind of disagreement is what makes a market.

Quote
PBV bars on the left side of that chart indicate a clear upper resistance level

I've never seen those until I saw your charts.  Those are nice for indicating where you've got "heavy traffic," so to speak, but they aren't descriptive of what kind of pattern we've got on the chart.  I don't think that you were implying that, though.  Just wanted to clarify.

Coming off the 2003 low, I see HEC as a big Symmetrical Triangle (pattern in blue), containing a nice "W"-bottom (pattern in black) from mid-2004 to mid-2005.

We had a fractal (repeating pattern) of that "W" bottom pattern in late 2005 and early this year.

I'll show you those patterns next.

Between July, 2004 and early September, 2005, HEC formed a "W" bottom (also known as a double bottom).  The middle of the "W" is where the breakout is, so I lke that term better.

A few points I want to make about that:

1. It took an entire year for that pattern to form, and only TWO DAYS for the target to get MADE, and it was gain of 44%.  That's why these pattern breakouts are so nice. 

2. It was obvious to everyone who was following HEC in early September, 2005 that a breakout above 0.68 was important, which is why players jumped all over it and rallied the stock 44% in two days.

Targets normally aren't achieved so quickly, and we don't expect that, but that breakout is great example of why our efforts in this thread and others can be productive if we're paying attention.

3. This isn't a big deal, but notice that I used the higher (more conservative) of the two bottoms, 0.38 instead of 0.37, to calculate the target.  In this case, the target MADE to the exact penny, but it would have fallen short if I had used 0.37. 

Again, targets are just "what we're aiming for," based on what the pattern measurements suggests.  I find it better to take the conservative measurement, and to take the money if I get close to the target.

Back to HEC...

After the 0.98 target MADE, HEC put in a bottom at 0.55, rallied to 0..74, put in a double bottom at 0.55, then broke out above 0.74.

Another "W"-bottom breakout, a fractal (repeating pattern) of the larger "W"-bottom.

This time, the 0.95 target didn't make.  It got only to 0.85, which is a pretty big percentage miss.

EDIT: The target is 0.93, not 0.95.  Sorry.

Since the 0.85 high, HEC has been trading within a bull flag, which initially looked fine, but it has developed three problems:

1. On February 3, HEC closed at 0.73, below the middle of the "W," which is 0.74. It also penetrated the bottom of the bull flag, but closed above it that day.   

Okay, so give it a chance. 

HEC recovered from that and rallied for three days to 0.81, which was a third hit to the top of the Bull Flag.  The trendline on February 8 was 0.81 exactly.

Unfortunately, HEC went down from there, and re-violated 0.74 (the middle of the "W") again on a closing basis.

That puts the 0.93 pattern target ON HOLD, and arouses suspiciion about it making at all.

2. Last week, HEC also closed twice below 0.68, which was the middle of the BIG year-long "W"-bottom, and closed below it on a weekly closing basis.  0.68 "should have been" support.  It wasn't HEC closed at 0.66.

3. On Friday, HEC also closed below the bottom of the Bull Flag.   

There's "some" justification for that, which I'll explain with a close-up of the chart in the next post, but I'll say this:  When I find that I'm having to do a lot of justifying for being in a position, I'm probably in trouble.

It "could be" the case that HEC...

1. BROKE SUPPORT at 0.74

2. BROKE SUPPORT at 0.68

3. BROKE SUPPORT at the bottom of the Bull Flag

....so that it could fill this gap at 0.66.  Friday's close was 0.66 exactly.

What stands out to me is that the stock did alot of chart damage, breaking all of that support to fill the gap, and not just because I typed it in caps.



It also "could be" the case that HEC is going to the 200 DMA at roughly 0.61, or "could be' the case that it's going all-ll the way back to 0.55, which is 16.66% lower from here.



Just my take, but that's way-y too much risk for me for a stock that just broke three levels of support.  Last week's low was 0.65.  That would be it for me, but we all have different tolerences for risk.

By the way, anyone notice that pattern in blue?

OH-HH-H, NO-OO, NOT ANOTHER RECTANGLE!!! 

Great work Guys!!

Here's my favorite Ascending Triangle play!  O....by the way, I started a poll with only the agreed ascending triangle plays..........choose your favorite.

Thai,

Thanks for your post on CNXT, and for your poll idea.  Applause.

CNXT has a smaller Ascending Triangle Breakout that has a target of 3.59 IN PLAY, right back to the old high of 3.60, and back to the top of your larger Ascending Triangle.

CNXT has been a nice chart to play, as far as targets getting MADE:

1. The 15-month Inverse H&S pattern broke out on November 3, 2005.   Target of  3.39 MADE on January 11, 2006.

2. The Measuring Gap target of 3.61 MADE within one penny on January 26, 2006

3. The Bear Flag target of 2.60 MADE within one penny on February 7. I was watching CNXT that day and knew the 2.60 was the target, but that long-g black candle didn't look like a low.

It was a low.  Drat. 

I quit watching it, and missed the March 1 Ascending Triangle breakout.  Drat. 

4. Ascending Triangle breakout above 3.10-3.12 on March 1.  3.59 is IN PLAY.

Math:

Use the lower (more conservative) of the two tops, which is 3.10.

3.10 - the low of 2.61 = 0.49 points

0.49 points + 3.10 = Target 3.59 IN PLAY

Note: When playing it though, you want to see 3.13 get printed, a penny above the high of the Ascending Triangle pattern, which is 3.12.

It's fine if anyone wants to use 3.12 for the calculation.  I just like to be conservative so that my expectations aren't too high.  In this case, two cents isn't going to matter that much.

CNXT closed at 3.26 on Friday.  A rally to the 3.59 target would be a gain of 10.1%

If we get a pullback to the top of the Ascending Triangle (3.10-3.12), an entry at 3.12 would be a gain of 15.1% on a rally to the 3.59 target.

Hmm......You're right Melf.  I didn't see that triangle within a larger triangle.  I'm liking the trade even more now if I get in.  It appears as though that it might breakout above the 3.59 target on to the breakout of the larger ascending triangle.  Now I gotta see what I should get rid of to get me some CNXT 

Thai