Wedge Pattern

This is an important pattern to master.  When this and accomodating indicators line up, there is a high probability chance of a breakout.  If you can find this pattern in the market when the underlying stock is a solid company then you will have a high success rate when your entries are disciplined and you exercise patience.

Here are some examples:

PBR

This is an example of a falling wedge pattern.  Typically these breakout at the halfway mark of the wedge pattern as indicated by the grey dotted price-level.

JPM

Here is another wedge pattern with a breakout from the 200 ema.

S

The two previous charts show how the wedge pattern plays out.  Sprint was an entry I made on Monday and will be in my portfolio until the pattern plays out to completion.  Will track Sprint as it breaks out.

VIX On The Move

VIX (fear indicator) has been coiling back like a spring for a breakout. Today the VIX is +2.2 and has broken out of it’s 6-month holding pattern. It has been approaching the lows of 15. I’ll watch for a continued move to the upside as fear in the market increases from uncertainty and poor market performance after the elections and QE2 have already been built into the market.