Posted on August 1st, 2008 at 07:50 AM
Did you say eclipse? I hear that question quite a bit. No, I said elipse, pronounced E-Lips. What is an elipse? It is a tool that we use to measure pullbacks. When markets trend, they pullback in various ways. We use the elipse to measure where that pullback may end both in TIME and in PRICE. If you know where something might end AND you can identify a decent risk reward then you are staring in the eyes of an opportunity. The yellow oval shaped elipse in the chart of the Banking Index ($BKX) below shows that the pullback in the ($BKX) may be exhausted here. The next target on the ($BKX) is $40. The target on Citibank (C ) is $10.
