Working Money magazine.  The investors' magazine.
Traders.com Advantage

INDICATORS LIST


LIST OF TOPICS





Article Archive | Search | Subscribe/Renew | Login | Free Trial | Forgot ID?


PRINT THIS ARTICLE

DOUBLE TOPS


Midcap iShare MDY Consolidates After Support Break

05/24/04 09:24:37 AM
by Arthur Hill

The S&P 400 Midcap iShare (MDY) recently confirmed a double top and has now formed a volatile consolidation just below broken support.

Security:   MDY
Position:   Sell

Looking at the weekly chart for some perspective, the stock went on a major bull run from Mar-03 to Mar-04. It stalled just below 115 as two peaks formed in March and April. Combined with the intermittent low in March, a double top evolved with key support at 105.64.

Figure 1: Weekly chart of MDY.
Graphic provided by: MetaStock.
 
The decline in April and May broke below the trendline extending up from Mar-03 and below the Mar-04 low to confirm the double top. Based on traditional technical analysis, the projected decline would be to around 98 (113.48 - 105.64 = 7.84, 105.64 - 7.84 = 97.8). Also notice that volume expanded on the support break as selling pressure intensified (gray arrows).


Figure 2: Daily chart of MDY.

Broken support at 105.64 has now turned into resistance as the stock consolidates (gray oval). This is the first level to watch for signs of strength and a break above this level would open the door to a retracement of the prior decline (103.38 to 101.87).

Even though the consolidation is not a picture perfect pennant or flag, it should be considered a bearish continuation pattern. The index declined sharply from around 113 to around 102 and then paused for a rest. The prior move was down and a continuation should be expected. A move below the consolidation low at 101.87 would signal a continuation down and the next target would be the double bottom projection around 98.



Arthur Hill

Arthur Hill is currently editor of TDTrader.com, a website specializing in trading strategies, sector/industry specific breadth stats and overall technical analysis. He passed the Society of Technical Analysts (STA London) diploma exam with distinction is a Certified Financial Technician (CFTe). Prior to TD Trader, he was the Chief Technical Analyst for Stockcharts.com and the main contributor to the ChartSchool.

Title: Editor
Company: TDTrader.com
Address: Willem Geetsstraat 17
Mechelen, B2800
Phone # for sales: 3215345465
Website: www.tdtrader.com
E-mail address: arthurh@tdtrader.com

Traders' Resource Links
TDTrader.com has not added any product or service information to TRADERS' RESOURCE.

Click here for more information about our publications!


Comments or Questions? Article Usefulness
5 (most useful)
4
3
2
1 (least useful)

PRINT THIS ARTICLE






S&C Subscription/Renewal




Request Information From Our Sponsors 

DEPARTMENTS: Advertising | Editorial | Circulation | Contact Us | BY PHONE: (206) 938-0570

PTSK — The Professional Traders' Starter Kit
Home — S&C Magazine | Working Money Magazine | Traders.com Advantage | Online Store | Traders’ Resource
Add a Product to Traders’ Resource | Message Boards | Subscribe/Renew | Free Trial Issue | Article Code | Search

Copyright © 1982–2019 Technical Analysis, Inc. All rights reserved. Read our disclaimer & privacy statement.