Fast forward to today and it looks like red 5 might have bottomed. A reasonable way to play this is to buy the open tomorrow and then stop out just below today's low of $7.98. And by that I mean 1 penny below. While the chart looks pretty close to the model, it's still just a model. Since the model was able to predict today's move so accurately, it gets a bit more street cred. In others, a buy signal was generated. But a lower low, which is always possible, negates that signal and thus you stop out because you are playing a failed model. In that case, you re-count to find a new model. You do not hope and pray. You stop out, period. This kind of structured discipline is the only way to beat Wall St. at its own game IMVHO.
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