As of 09/29/2022
  Indus: 29,226 -458.13 -1.5%  
  Trans: 12,258 -199.22 -1.6%  
  Utils: 906 -38.84 -4.1%  
  Nasdaq: 10,738 -314.13 -2.8%  
  S&P 500: 3,640 -78.57 -2.1%  
YTD
-19.6%  
-25.6%  
-7.6%  
-31.4%  
-23.6%  
  Targets    Overview: 09/15/2022  
  Up arrow32,000 or 29,200 by 10/15/2022
  Up arrow13,800 or 11,800 by 10/15/2022
  Up arrow990 or 900 by 10/15/2022
  Up arrow11,975 or 10,700 by 10/15/2022
  Up arrow3,800 or 3,500 by 10/15/2022
CPI (updated daily): Arrows on 9/13/22
As of 09/29/2022
  Indus: 29,226 -458.13 -1.5%  
  Trans: 12,258 -199.22 -1.6%  
  Utils: 906 -38.84 -4.1%  
  Nasdaq: 10,738 -314.13 -2.8%  
  S&P 500: 3,640 -78.57 -2.1%  
YTD
-19.6%  
-25.6%  
-7.6%  
-31.4%  
-23.6%  
  Targets    Overview: 09/15/2022  
  Up arrow32,000 or 29,200 by 10/15/2022
  Up arrow13,800 or 11,800 by 10/15/2022
  Up arrow990 or 900 by 10/15/2022
  Up arrow11,975 or 10,700 by 10/15/2022
  Up arrow3,800 or 3,500 by 10/15/2022
CPI (updated daily): Arrows on 9/13/22

Bulkowski's Jones Apparel Group (JNY) Trading Quiz

Released 11/30/2021.

JNY: Quiz

Below is a slider quiz to test your trading ability. Captions appear below the pictures for guidance, so be sure to scroll down far enough to read them.

 

1 / 6
chart pattern

What chart patterns can you find? Look for the following (if you find others, great!): 2 Eve & Eve double tops, broadening top, falling wedge, descending triangle, symmetrical triangle.

The answer is on the next slide.
2 / 6
chart pattern

Price has pierced the upper trendline of the broadening top and closed above it.

Question 1: Do you buy or sell short the stock?
Question 2: What is your price target?
Question 3: What is your stop loss price?
See the next slide for answers.
3 / 6
chart pattern

Answer 1 (Buy?): Buy because of the upward breakout, but look for overhead resistance first. The red lines show possible places of overhead resistance. Whether price will reverse there is anyone's guess, but it's better to depend on a reversal. That is a good segue to answer 2.

Answer 2 (target?): If price reverses at the first line, that's a gain of 2%. If it climbs to the top line, that's a gain of 6.7%. Price could go much higher, or not. Again, that's the difficulty of trading a chart pattern that is not at the yearly high: You often run into overhead resistance.

Answer 3 (stop?): What's the stop price? To answer that, find underlying support. Where is it? The next slide shows my guess.

See the next slide.
4 / 6
chart pattern

The green lines show what I think are support zones. I placed them using the top or bottoms in the price cluster from March onward. If price declines to the first line, that's a drop of 6%. The second green line down from the top means a drop of 8.3%, line 3: 13.4% and the bottom line: 19%.

Comparing the risk reward ratio, we have a possible drop of 6% versus a reward of 2%. The next lines show a risk of 8.3% versus a rise of 6.7%. In other words, the risk of a decline is higher than the reward, if my analysis turns out to be correct. That is a red flag. Some analysts look for a reward/risk ratio of 2 to 1 or even 4 to 1 as a minimum before they will invest.

In my trading, I don't care about ratios. I place the stop appropriately for the trade and worry about overhead resistance. Often, price will punch through the resistance and soar, so a trade with a poor ratio turns into a big winner. But that's just me. The real ratio is not where support is, but where you place the stop. So, where DO you place the stop?

Volatility is $1.08, so a stop no closer than 31 would work. That's 1.08 below the current low of 32.08 for a potential loss of just over 6%. It's also the site of the top green line. I'd put the stop a few pennies lower than the line. You want the support zone to, well, support prices so the stop won't take you out. With 31 being a round number, that should also be avoided. I'd place a stop at 30.93 for a potential give back of 6.4%.

How did we do? The next page shows the answer.
5 / 6
chart pattern

Price touched overhead resistance and threw back to the broadening top. Lucky guess on my part. Price is still above the stop price shown as the green support line, but price is heading down. What do you do now?

Question: Do you sell your long holding, short, or flee in panic? The answer appears below.

See the next slide for answers.
6 / 6
chart pattern

Answer (sell?): This is typical behavior for a throwback. Since we have a stop in place, you should hold onto your holding. Since underlying support is nearby, DON'T short the stock. The correct answer is to flee in panic. When you settle down after that, you can come back to see what happened with a more rational mind.

Price didn't hit the stop and it climbed well above the 35+ top overhead resistance line.

The End.

See Also

 
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