in the world I live in the chart is everything …
price and time and PATTERNS. an amazing businessman, friend, mentor and excellent investor/trader and I are short YHOO. he’s listened, studied and has seen the power of the patterns …the power in the fact that they manage risk. BUY or SELL at the pattern level and decide how much to risk … pretty easy, correct?
well, tonight, I’ll admit I am tired …
as one of the few remaining BEARS out there I simply have to take stock of YHOO. We are short YHOO and it’s held 33.50 for three months. if you study the chart below and if your a candle guy or gal you’ll find that for 3 months the OPEN/CLOSE has been almost exactly at the same level. pretty cool that the PATTERN identified has held the market at bay and yes, REAL capital has been deployed. (note: I don’t know WHO this is going out to in the virtual world but everything that I blog is real time w/ real capital at RISK..) the bottom line — it HAS NOT sold off from this level. I could go on and on about margin debt, cycles from the 1800’s, deflation, QE, talking head pundits and all of that “stuff.”
so what do you do … ? you go back to your training and objectively assess the situation.
1. in 2005 top there were, obviously, some very powerful intra-month swings for 3 months and then capitulation.
2. look at the lows in 2001-2003 – TWO YEARS of an up and down swing and then it explode from 4 to 44 dollars.
3. mid 2006-mid 2007 we did the N correction (blue arrows) and then capitulation…note, we are at the same level as we were at the time of the thump in 2007. coincidence? no…I don’t think so…
so, if you think about it for 3 months we have been “in the money” and “out of the money” so what is the gameplan …?
1. REMAIN SHORT
2. Expect 33.52 to potentially give away to the upside but the 36.25 area to hold and it sells off big time.
3. IF we get a DAILY close above 38/we are wrong and STOP OUT.
now that I have presented my plan there is no “fret” or “guessing” just pure numbers …
look at that SEPTEMBER candle into 33.36 … we KNOW why it’s digesting in this area, but we don’t know if it’s going to crack and go to 16 …
last thing – note our low was 9 (3*3) and the .786 is 36 (6*6)
“it is always better to be out of the market wishing you were in, than in the market wishing you were out …”
believe we will find out, soon where this puppy is going ….
TAP OUT or put up the Rocky fight … TBD