As of 07/01/2022
  Indus: 31,097 +321.83 +1.0%  
  Trans: 13,289 +132.53 +1.0%  
  Utils: 993 +23.33 +2.4%  
  Nasdaq: 11,128 +99.11 +0.9%  
  S&P 500: 3,825 +39.95 +1.1%  
YTD
-14.4%  
-19.4%  
 +1.2%  
-28.9%  
-19.7%  
  Targets    Overview: 06/29/2022  
  Up arrow32,300 or 29,900 by 07/15/2022
  Up arrow14,000 or 12,500 by 07/15/2022
  Up arrow1,000 or 925 by 07/15/2022
  Up arrow12,100 or 10,750 by 07/15/2022
  Up arrow4,000 or 3,700 by 07/15/2022
CPI (updated daily): Arrows on 6/23/22
As of 07/01/2022
  Indus: 31,097 +321.83 +1.0%  
  Trans: 13,289 +132.53 +1.0%  
  Utils: 993 +23.33 +2.4%  
  Nasdaq: 11,128 +99.11 +0.9%  
  S&P 500: 3,825 +39.95 +1.1%  
YTD
-14.4%  
-19.4%  
 +1.2%  
-28.9%  
-19.7%  
  Targets    Overview: 06/29/2022  
  Up arrow32,300 or 29,900 by 07/15/2022
  Up arrow14,000 or 12,500 by 07/15/2022
  Up arrow1,000 or 925 by 07/15/2022
  Up arrow12,100 or 10,750 by 07/15/2022
  Up arrow4,000 or 3,700 by 07/15/2022
CPI (updated daily): Arrows on 6/23/22

Bulkowski's Russell (RML) Trading Quiz


Released 3/30/2022.

RML: 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 / 4
chart pattern

What chart patterns can you find? Look for the following (if you find others, great!): head-and-shoulders bottom, 4 symmetrical triangles, inverted and descending scallop, and inverted and ascending scallop.

The answers are on the next slide.
2 / 4
chart pattern

The head-and-shoulders bottom has broken out upward when it closed above the neckline.

Question 1: Do you buy, short, or avoid trading this stock?
Question 2: What is your price target?
Question 3: What is your stop loss price?
See the next slide for answers.
3 / 4
chart pattern

Answer 1 (buy?): Buy because the breakout is upward.

Answer 2 (target?): Compute the height of the head-and-shoulders bottom from the head low (16.22) to the neckline (17.21), measured vertically and add it to the price where the stock crosses the neckline (16.89). That gives a target of 17.88. Price hits the target 71% of the time so be conservative. Look for overhead resistance that would pose a problem for the stock continuing to rise.

Answer 3 (stop?): Since this is such a small pattern, place a stop below the head, call it 16.17. That gives a potential loss of about 4%. Volatility is 59 cents, so the stop is far enough away that you won't likely be stopped out on normal price fluctuation. See my website "stop placement" if a volatility stop is new to you. The score according to my Trading Classic Chart Patterns book rates the head-and-shoulders bottom a -3, meaning the probability of hitting the 21.96 median price target is small.

After the head-and-shoulders in October 2004, the stock has climbed and formed an Adam & Adam double top, confirmed when price closed below the low between the two tops (the last price bar on the right of the chart).


Question 1: Do you buy, short, or sell this stock if you own it?
Question 2: How could you have exited a position in the stock sooner?
The next slide shows the answers.
4 / 4
chart pattern

Answer 1 (buy?): Sell an existing holding and consider shorting the stock. If you decide to short the stock, be aware that price may rebound at TL 2, a trendline connecting the lows and forming a right-angled and descending broadening chart pattern. If this were my trade, I'd avoid shorting the stock based on what I see and what I think is a limited downside move due to underlying support.

Answer 2 (sell sooner?): Use the sell trendline. When price closes below the trendline, sell.

You can see that price did bounce off the TL 2 trendline before forming a partial rise (as part of the right-angled and descending broadening formation, the yellow line and TL 2) and staging a downward breakout. Price eventually recovered and formed an Adam & Adam top at 21.84 (AA, far right on chart), just pennies below the book score median rise of 21.96. Price failed to meet the target before tumbling more than 20%, as predicted, but it was a near miss.

The End.

See Also

 
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Chart Patterns: After the Buy

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