QUOTE:
master bonner,
excerpt from your comment on HI (House of Investment)....."A rising wedge doesn't break out. It breaks down. If it breaks out, it's not a wedge".
Please forgive my ignorance, I just want to know if a wedge formation either rising or falling is a clear sign of bearishness?
ABS has just broken-out from a falling wedge, during our 3rd session (batch 12) i recalled you and master danny had advised us to refrain from getting into stocks within the area pattern of a triangle formation coz nobody knows what may happen unless it breaks out......so with volume confirmation is it (ABS) a buy recommendation?
thank you..
Mhanz, allow me to give my opinion. Master - please correct me if I'm wrong.
A rising wedge is always bearish and a falling wedge is always bullish. Wedges usually last more than a month but not more than 3 months. Its usually a continuation pattern, in the case of ABS, since it is in an uptrend ( since 2006 ), it further confirms that this is likely a falling wedge.
We should refrain from getting into stocks inside the triangle bec. there is no assurance that it will break-out ( it can just fizzle out too).
In the case of ABS, it seems to be a legitimate breakout, but personally, I have no plans trading this, as I find this stock quite laggard and not very liquid ( last trade, only 200 shares! ). In my short experience in trading, there are times when legitimate breakouts, even with volume do not move as fast. Case in point is ALI, recently broke out of the triangle with huge volume. I got in at P16 when the volume was very heavy and breakout was confirmed, but so far, the stock hasnt moved as fast ( although waiting time isnt over yet ).
