Thursday, February 1, 2007
When is a Breakout is Confirmed?
I use the close for two consecutive days over the breakout / trend turning point level as a confirmation. So often in the past few years, a breakout is met with heavy selling by beefers that day or the following day. I think the program traders' computers hit those automatically, so only a very strong breakout can push them aside in one day. Or a "breakout" can just be beefers trying to run stops, hence false. Last week's breakout was hit hard the following day. The "second mouse" pattern that I wrote about a few days ago uses this caution as a trading / investing tool. Yesterday's S&P move over the ascending triangle upward break line might be the second mouse move. A close over that line today would confirm the second leg / second phase move is underway. Still holding 150-200% long & strong.