Thursday, February 09, 2006

DIAmonds are a Bear's Best Friend

The $INDU (and therefore the DIA) is in a rare diamond pattern right now. Regardez vous:


This is simple, folks. If the Dow breaks below 10,750, it's party time for the bears. Just watch.

5 comments:

Anonymous said...

Doesn't it take 3 points to make a trend line? And if so, the top 2 trendlines only have two points.

Tim Knight said...

In my experience, 2 points is sufficient, although the more points it touches, the more valid the line. All the same, most technicians I follow agree this is a good strong diamond pattern.

Anonymous said...

I WANT to believe, but doubt whether Mr. Market sees the diamond pattern. Re recent commentary on the market's ability to forecast: before 9/11 the market was already in freefall; and the day before the invasion of Kuwait, the world had been aware that something was going to happen. So, neither case seemed so persuasive to me. If TA worked, wouldn't we all be rich?

Jock

Anonymous said...

Hi Tim,
I'm a PHD guy with investools and have studied a good amount of the advanced technical analysis and many Pattern formations...triangles, flags, Head and Shoulds, Cup and Handle, wedges, pennants....
But I've never even heard of a Diamond pattern. Could you explain a bit about the theory of Diamond pattern?
Many Thanks.

Tim Knight said...

Regarding the definition of a diamond pattern, here's an excellent article on it: http://chart-patterns.netfirms.com/diamond.htm