Megaphones everywhere!! (broadening formations)

N

N54_Fan

Anyone else see them? Usually this is a very bearish formation as it implies a lot of volatility. I see it on the $COMPQ, SMH, $SPX, $INDU, XLY, and XLK to name a few.

I do NOT trade solely based on these formations but keep them in the back of my mind for targets and possible reversal of recent upward move.

Anyone have any thoughts on these?
 
Quote from failed_trad3r:

Technical patterns like these which are very vague are too vague. So nobody trades them.
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Agreed. I do not trade off of them either but when I see these taking shape it sure gives me pause before I commit more capital to the long side. That was my point. If you see resistance on a trend channel you probably lighten your load or at least tighten stops on a long position. But when I see these formations I tend to run with the winning side (long/short) but commit very little capital as these USUALLY designate high volatility ahead and bearish outcomes.

So I guess I am saying I do not use them as a buy or sell signal but as a reduce risk and tighten stops signal. Curious if anyone else does this too?
 
Quote from N54_Fan:

Agreed. I do not trade off of them either but when I see these taking shape it sure gives me pause before I commit more capital to the long side. That was my point. If you see resistance on a trend channel you probably lighten your load or at least tighten stops on a long position. But when I see these formations I tend to run with the winning side (long/short) but commit very little capital as these USUALLY designate high volatility ahead and bearish outcomes.

So I guess I am saying I do not use them as a buy or sell signal but as a reduce risk and tighten stops signal. Curious if anyone else does this too?
More...

Why would you not go long 100% at the moment when QE3 rally to S&P 1500 is about to commence?
 
Quote from failed_trad3r:

Why would you not go long 100% at the moment when QE3 rally to S&P 1500 is about to commence?
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If we break through 1270 I may do that. For now just small long positions and awaiting confirmation as we butt up against 1270 as resistance.
 
Looks like the break above 1270 to 1290 was just a bull trap. This also completed the top resistance line of a rising megaphone that I was describing when I started the thread. This would suggest a low of 1050-1060 on SPX is ahead.
 

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