Technically speaking, these patterns represent a setup that has come to be known on iBC as The Honey Hole. The Honey Hole is the mythical intersection between price and moving average where bears meet up to pillage, plunder, and eat honey.
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Hi Wood:
Can you elaborate on that statement. I personally was looking at these in totally different way, i.e. add to positions.
He did http://ibankcoin.com/woodshedderblog/2010/07/16/bearss-honey-hole-or-bulls-murder-hole/
When the market turns, these will be good shorts. If the market doesn’t turn, it is anyone’s guess.
I would NOT want to add to a position after it has already come off a bottom and is beneath the 50 day. I would want to add as it is falling. If it re-takes the 50 day and works off some of the overbought, then yes, I would consider adding there as well. However, these are rather subjective determinations and I’m sure there are ways to make this setup work from the long side.
I see what you are saying. What you are saying is 50 day poses a significant resistance so the bears will be lurking to take it down unless there is enough buying pressure.
Thx
Exactly.
Caveat: This setup has been so popular (and was popularized by William O’Neil) that the edge may be eroding.
By the way, that 20sma coming back into agreement with the 200sma system I am looking at bought SLV, NKE, and shorted BBY in the last couple days.
I am running it only on very large cap stocks and it’s working very well. (doesn’t really work long term if you include small and mid-sized stocks)
By the way I love your work and have learned a lot. I hope to be a subscriber to your power dip system sometime in the next six months.
Discoordinated- I’ll run it over the Nasdaq 100 and the S&P500 components. Thanks for the info!