Sideways action since October 2003

RealMoney

After a huge run up in 2003, what makes the most sensein 1H 2004? Gary Smith (of the Street.com) thinks the recent action is pretty much exactly what the market needed, if its to keep moving higher.

Note that G is a pure technician, and approaches his trading from that perspective:

double_bottom_sideways

chart courtesy of thestreet.com

Gary notes: “While we’ve done nothing more than move sideways since last October, that’s exactly the kind of action the market needs in order to work off the early 2003 rise, and then form a base for another leg up.”

What's been said:

Discussions found on the web:
  1. Mike commented on Aug 19

    Double bottom? Hmmm, I thought that was thee Death Cross that just flashed.

  2. Joseph Rivera commented on Aug 20

    Not to argue with scenario #2 unfolding but the semantics of calling this chart pattern a “DOUBLE BOTTOM” ?!? What?
    My understanding of a double bottom is that it is a REVERSAL pattern, meaning it needs to form in the context of a downtrend. The way the chart is shown it looks MUCH MORE like a DOUBLE TOP around 38 than a double bottom around 32.

    To find a true double bottom I’d be looking around 20-25 or so.. Oh the joys of TA and Rorchach’s

  3. Barry Ritholtz commented on Aug 21

    I think you are right on the semantics — its really a potential
    support place on a continuation pattern — not a true double bottom

    then again, Gary Smith is not the typical technician, and uses
    his own vernacular — but it works well for him.

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