Now then, David Nassar. You have been a busy boy. Absolutely everywhere at the moment. Books, magazines, websites. When is "Directional Movement" the movie coming out?
If you don't mind I would like to profer my own analysis on your pending H&S top in the SOX.
You might have also been looking for a H&S top around May/June. However from simple analysis I count at least 3 times you would have been squeezed on the short size before the move, the worst of which was in August when it actually negated the H&S . This might have eradicated most of the profits on that move if you had not had really tight stops.
First off we really need an indicator that offers more data from another source. This would simply be volume. However you can't get that for SOX, so let's look at 2 of the largest stocks in the index as well: Intel and Applied Material.
What we are looking for is the tell tale decrease in volume on the right shoulder. However neither stock has really seen marked depreciation in comparison to the head or the left shoulder.
What that says to me is that either we have a little more upside or this sideways consolidation will continue a while longer, squeezing breakout plays, possibly in both directions. I would plump for the latter. In fact judging by the way it has moved in the past it would not surprise me to see breakouts below 500 on the SOX that get squeezed to the upside.
If I was an options man, and with the vix at a reasonable level at the mo, I would be looking at a strategy that basically bets on sideways or upward movement right now. Credit spread or something of that ilk.
PS: Charts have not come out too well because of damn 102400 limit. All 3 on one page = 160000. Pain in the butt!
