Gotta love the wedge...I traced it out a couple of days ago and sent it out to friends. This one should be interresting....
We really don't know which direction the market will take. One way to take advantage of what we do know ( the wedge formation will break to the upside or downside ) is to buy a call option and a put option.
This board is great: http://ragingbull.lycos.com/mboard/viewclub.cgi?board=CLB00506 Lots of cycle analysis. Everybody is short over there too. All the public lists at stockcharts.com are focusing on the wedge as well.
well now everyone sees that wedge. great. now what will separate losers from winners is how EXACTLY you will play it. what will trigger your entry, stops, how will you manage the trade. im sure there's a person who noticed the wedge earlier than all of us but he's not gonna get any $ for noticing it. what matters is how you play it. and i havent heard one good way to play it here yet (except spreadem but thats a non-directional trading options play). here's how i would play it - let it break first, then get in on the first pullback. either direction.
Two simple lines are better TA tool then anything else . There is a homework for all interested . Try to pinpoint exact moment of change by using only trendlines . Walter
I understand what you're saying ... but whenever it breaks the total volatility will increase and the value of both the call and the put will increase. So even though buying a straddle is a nondirectional play it still can make money because of the anticipated increase in volatility.