As of 11/25/2022
  Indus: 34,347 +152.97 +0.4%  
  Trans: 14,443 +62.16 +0.4%  
  Utils: 972 +6.42 +0.7%  
  Nasdaq: 11,226 -58.96 -0.5%  
  S&P 500: 4,026 -1.14 0.0%  
YTD
-5.5%  
-12.4%  
-0.9%  
-28.2%  
-15.5%  
  Targets    Overview: 11/11/2022  
  Up arrow35,000 or 32,000 by 12/01/2022
  Up arrow15,300 or 13,400 by 12/01/2022
  Up arrow1,000 or 925 by 12/15/2022
  Up arrow11,850 or 10,400 by 12/01/2022
  Up arrow4,150 or 3,700 by 12/01/2022
CPI (updated daily): Arrows on 11/4/22
As of 11/25/2022
  Indus: 34,347 +152.97 +0.4%  
  Trans: 14,443 +62.16 +0.4%  
  Utils: 972 +6.42 +0.7%  
  Nasdaq: 11,226 -58.96 -0.5%  
  S&P 500: 4,026 -1.14 0.0%  
YTD
-5.5%  
-12.4%  
-0.9%  
-28.2%  
-15.5%  
  Targets    Overview: 11/11/2022  
  Up arrow35,000 or 32,000 by 12/01/2022
  Up arrow15,300 or 13,400 by 12/01/2022
  Up arrow1,000 or 925 by 12/15/2022
  Up arrow11,850 or 10,400 by 12/01/2022
  Up arrow4,150 or 3,700 by 12/01/2022
CPI (updated daily): Arrows on 11/4/22

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

 
Top of page
 

 

Support this site! Clicking any of the books (below) takes you to Amazon.com If you buy ANYTHING while there, they pay for the referral.
Legal notices: "As an Amazon Associate I earn from qualifying purchases." Paid links).

My novels:  Bedroom to Boardroom book Remember Me book Bumper's Story book Head's Law book
My stock market books:  Chart Patterns: After the Buy Getting Started in Chart Patterns 2nd edition book Trading Basics book Fundamental Analysis and Position Trading book Swing and Day Trading book Encyclopedia of chart patterns book Encyclopedia of Chart Patterns 3rd Edition book Trading classic chart patterns book

Copyright © 2005-2022 by Thomas N. Bulkowski. All rights reserved.
Disclaimer: You alone are responsible for your investment decisions. See Privacy/Disclaimer for more information.
Some pattern names are registered trademarks of their respective owners.
Home Advertise Contact Donate Links Privacy/Disclaimer