Читать книгу Encyclopedia of Chart Patterns - Thomas N. Bulkowski - Страница 97

With Energy East Corp. (EAS), I saw a big W forming and price didn't confirm the pattern before heading back down to the price of the first bottom, where I bought. I received a fill at 23.12.

The stock cooperated, for a time, by rising but eased lower and looked to be heading down about 3 weeks after I bought. I sold it for a 2% loss so I could deduct it on my taxes.

From my notebook: “Sell reason: End‐of‐year tax‐loss selling. This is going down, I predict, so it's time to dump it and lower my cap gains taxes. This H&S [head‐and‐shoulders] bottom didn't work as expected.”

The head‐and‐shoulders became apparent after I bought (which happened at the right shoulder low), and it never confirmed by the time I sold on 30 December 2005, at 22.69.

This trade contradicts the prior lesson. If I had placed a buy stop a penny above the top of the big W, I would have entered the trade at 24.06, well above my 23.12 purchase price. The big W didn't confirm until 10 January 2006, where the stock continued up to make a vertical run for 8 days (peaking at 25.57). Then it moved sideways to down for 1.5 years.

I sold on the day the stock started to climb in that vertical rise. Bad exiting timing, that's for sure. But I would have collected dividends from the electric utility only if I had continued to hold the stock, so selling was a good choice.