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The Morning Cup of Jo


Come on Tickles -- I thought Yesterday's Jo was good news!


Trademark Pending

Good Morning and welcome back to Ollie's Diner for a continuation of yesterday's conversation about basing patterns.

Yesterday I posted a 'Jo' that referenced the "Three Sisters", potential bottoming patterns and their corresponding latent problems in relation to the momentum indicators. Also stated was, "I believe, since they are not complete, they have much room to go before reaching absolute. There are still many different scenarios that can play out from here." Therefore, today I wanted to show some of the "Other" scenarios.

Since we've already seen the three sisters, today I'll use the OEX, Russell 2000 and the Nasdaq 100 to demonstrate the opposing outlook.

When stocks or indices are in a basing pattern, as you well know, there is a likely break in either direction. For that reason you need to be able to look at the particular graph with both possibilities. These three graphs depict a feasible move in the other direction.

The OEX (S&P 100) is showing an Inverted Cup and Handle with a 530 neckline.

WONDA Copyright 2004 William O'Neil + Co.,Inc. All rights reserved

The Russell 2000 is illustrating the same pattern also with a 530 neckline.

WONDA Copyright 2004 William O'Neil + Co.,Inc. All rights reserved

The NDX (Nasdaq 100) has a Double Top with handle. (Neckline at 1360) Here I've also shown the next possible move, if broken, down to the next Floors & Ceilings. (1300)

WONDA Copyright 2004 William O'Neil + Co.,Inc. All rights reserved

I realize that looking at both potential outcomes can be somewhat confusing. On the other hand, making Net Long or Net Short decisions for your portfolio will depend on these moves. Consequently, it is extremely prudent to be prepared for both.

I hoped this helped!

Until next time...


No positions in stocks mentioned.

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