By Dr. Mircea Dologa, MD, CTA*
Posted: Jun 26, 2009

As most of us know, a pitchfork can't be constructed without knowing the exact location of the anchor (P0 pivot) and the P1 and P2 pivots, which will dictate the size and the slope of the P1 - P2 swing.

First, let me describe the morphology elements of the common pitchfork:

The length and slope of the handle will definitely influence the performances of the pitchfork's task. The handle is defined as the distance between the anchor (P0 pivot) and the P1 - P2 swing's midpoint (refer to Figure 3).

By Guy Bower of www.guybower.com*

OK, hands up, anyone here who has ever bought an option, then seen the market move in your favor but watched the option premium not move along with it. Come on: Be honest.

There are generally a number of reasons why this happens. The reason a trader might make this mistake is because he or she operates under the belief that he or she is trading the market, not the option. One of the messages all of my articles have in common is that an option has its own characteristics, and you should know them before you trade.

The reasons for the option premium not behaving the same as the market can all be answered by the “Greeks”, as they are called. The delta, the gamma, the theta (and those other little ones) are all measures that show how an option can change, given certain other changes (changes in time, the market and so forth).

Posted on July 1st, 2009 at 2:20 PM 

As most of you know the Daily chart of the the SPY has presented us with a very nice Elliott Type One Buy and was triggered on June 25th using an aggressive entry.  As a reminder an aggressive entry means that we are simply waiting for a break of the regression trend channel and not necessarily a close.  While during mentoring we have talked in length about the conflict between the daily and the weekly charts this trade should still have been triggered and entered as all 4 rules of the Elliott Type One were met.  My colleague Nate McCartney made an excellent post on the conflict a few days ago and I highly suggest you read it as it has been a focus of discussion in most mentoring classes it seems. http://ragingbull.quote.com/bullseye/node/1504

As far as the Type One goes we are now hitting some very key resistance levels that you should be made aware of.  In mentoring we have covered how to use the Ellipse (to steal a term from medicine) in an off-label use.  By drawing the Normal Ellipse from Wave 3 to Wave 4 we can get an idea of where our Gann Resistance lies in the Wave 5 Rally.  As you can see we are at a level of concern for multiple reasons.  First it is a match of the previous highs from early and mid-May, second we could be forming the right shoulder of a classic head and shoulder pattern which could signal a reversal.  Either of which tells me to take initial profits on our longs and to adjust stops in case this reversal occurs.