AI
Monday, June 27, 2005 7:25:14 PM
After the Bell: 6/27/2005 Transports Technical Pattern
For those received John Murphy’s commentary today, he brought up the usual great observation about the Trannies technical breakdown on this chart. As he pointed out that the formation of lower highs indicates a strong chance that the Trannies may not be able to hold the May low, which is at 3348.
Just to add to Mr. Murphy’s comment, this chart I used in my Sunday’s Chartmentary on 6/12 showed that during its 51 months of strong uptrend, Aroon UP (green line in lower pane) only touched the bottom twice (yellow highlights). It didn’t even touch the bottom on the 2 recent declines that fell below 30 (blue circles). Throughout this uptrend, the Aroon UP spent most of the time staying above 70. But then, it started to break down in April.
Things have changed, for the worse, since then.
The Trannies had since fallen below 3500, and, on this updated chart below, it appeared to be in the process of forming an imminent bearish Head and Shoulder’s pattern.
This pattern is to be completed when the Trannies break below the 3250 neckline with the 3rd confirmation of increasing volume on this decline. This would give the Trannies the target of 2807. But, it's still got a way to go.
There are some pretty good trading opportunities in the Transports right now, and more when the Head & Shoulder formation is confirmed. Just make sure you don’t bet on the wrong sector.
For those received John Murphy’s commentary today, he brought up the usual great observation about the Trannies technical breakdown on this chart. As he pointed out that the formation of lower highs indicates a strong chance that the Trannies may not be able to hold the May low, which is at 3348.
Just to add to Mr. Murphy’s comment, this chart I used in my Sunday’s Chartmentary on 6/12 showed that during its 51 months of strong uptrend, Aroon UP (green line in lower pane) only touched the bottom twice (yellow highlights). It didn’t even touch the bottom on the 2 recent declines that fell below 30 (blue circles). Throughout this uptrend, the Aroon UP spent most of the time staying above 70. But then, it started to break down in April.
Things have changed, for the worse, since then.
The Trannies had since fallen below 3500, and, on this updated chart below, it appeared to be in the process of forming an imminent bearish Head and Shoulder’s pattern.
This pattern is to be completed when the Trannies break below the 3250 neckline with the 3rd confirmation of increasing volume on this decline. This would give the Trannies the target of 2807. But, it's still got a way to go.
There are some pretty good trading opportunities in the Transports right now, and more when the Head & Shoulder formation is confirmed. Just make sure you don’t bet on the wrong sector.
David
#board-3693
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