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DowDeva

11/20/04 9:13 PM

#4823 RE: denmo83 #4822

Thanks, Denmo, also TQ and Frank for your suggestions.

What I wanted to point out is that on INTC the SP is hitting up against 200 sma, also at intersection of(bottom of) LT bullish trendline and bearish trendline. Very bearish, short term (after this week's rally of course)

What's interesting to me, however is that the RSI on the weekly for this last top is higher than the previous top of the share price, which was higher, but in which the RSI was lower. It's sort of a reverse divergence.

George Lane talks about it in his book. He calls them 'bull and bear setups,' when the oscillator makes a new high or low and the prices fail to confirm and concludes that the next rally may be an important top.

However, in 'Technical Traders Guide to Computer Analysis of the Futures Market' they go on to say that "...One of our newsletter subscribers took this pattern and reached a seemingly opposite conclusion. He observed that the bear set-up is often followed by an explosive breakout to the upside. We see an element in truth in both observations, which can lead to asn exciting combination of UNUSUALLY PROFITABLE TRADES (caps mine). If you buy the next rally after a bear setup, as our subscriber advocated, you could get a very explosive trade on the long side, This big trade to the upside would be followed by the top that George Lane is looking for - and you can expect a nice trade to the downside."

As this is on a weekly chart, I don't think it is talking about this week's action, but it doesn support Mr. Cash's and Airedales loose prediction of an explosive rally challenging and even exceeding the 01 highs. According to the 'bull and bear setup' theory, that would be the last top for quite a while. I have used this setup quite successfully when seen on weekly charts, and very rarely see it spoken of in tutorials on divergences.

Here's the link again:

http://www.ttrader.com/mycharts/display.php?p=28578&u=dowdeva&a=Deva%27s%20Charts&id=129...

Deva