Potential Wedge Patterns …

I mentioned in a blog post yesterday that I was looking for the overall market to have a bit of an oversold relief bounce this week … today really just confirmed that the short-term selling is probably all exhausted, and I am still looking for a bounce into month-end.

If we are indeed going to bounce, I like looking to any of my continuation scans (bull-flags, wedges) for possible long candidates …

Here is the TC2000 logic behind my 195-min wedge scan …

The first condition has price closing for 5 consecutive candles below the 20-period linear regression of the upper channel of the stock price highs x 1.0095.  The second condition has price closing for 5 consecutive candles above the 20-period linear regression of the upper channel of the stock price highs x 0.9905.

The next two conditions set the requirements for the “wedge” style consolidation pattern … the top linear regression line has to be downward sloping and the bottom linear regression line has to be upward sloping.

The final condition looks to the bigger trend and ensures that we are looking only at stocks that are trending higher overall.

Here is the results when I apply that scan on my main scan list of about 600 names …

There are 12 names that meet my scan conditions on the 195-min time frame.  The far right column actually measures the 3-day relative strength of each stock versus the SPY ETF.  0.0x equates to the stock exactly matching the SPY 3-day return – any number greater than 0.0x is a stock showing strength that I like to look for.

AAPL is a stock interesting as it appears that investors are becoming more and more comfortable with the iPhone 8 launch actually happening on-time in mid-September.  I am expecting the stock to continue to do well into month-end and probably right up until the end of the first week in September (September 8th).

AAPL 195-Minute Chart

You can see the wedge that is drawn with white lines automatically on the price chart … price made a nice little inside candle today with the last 195-min candle, which could mean that end of day pause was a consolidation pause that precedes an expansion phase push higher starting tomorrow or Wednesday.  The Relative Strength vs the SPY Indicator in the right panel shows that AAPL looks fine here and bulls should be fine adding to or starting a multiple-day positional trade once we can break this wedge pattern.  The upper wedge pattern line is at $161.67 … set your audio alerts!!

Note the linear regression lines on the R/S chart … I use those for several scans I like to run on that indicator.  I will go over some of those as we go forward into the busier fall trading season.

If you use TC2000, drop me a request via email and I will send over to you the pre-built scan conditions so you can incorporate it into your post-market review of the markets.

Cheers … Leaf_West

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