Chart Summary
                       When you analyze a potential  trade  you  are  simplylooking at the supply/demand situation of a stock. Is it  higher  highs  andhigher lows or lower highs and lower lows? Did  the  stock  close  above  orbelow the midpoint of its daily range? Was the close in the  top  or  bottomof its range? If it is to change direction it must trade above or below  theprevious periods high or low regardless of time frame. The longer  the  timeframe the more significant the move.                       As in our AOL example the  Generals  can’t  hide.  Inthis case AOL ran into trouble on day 1 making a new high  and  just  barelyclosing above the A day’s high and close. Day 1 closed  below  the  midpointof its range on  heavy  volume,  which  indicated  the  stock  might  changedirection. On day 2 the stock made  a  significant  reversal  as  it  closedbelow its open and well below the Day 1 low. It reversed  on  heavy  volume,closed in the bottom 30 percent of its range and also took out most  of  theA day WRB move to new highs.                       The sellers were clearly  in  charge  as  the  Day  2range expansion on a reversal day which was  a  wider  range  than  anythingpreceding the 175.50  high  was  telling  you  that  there  was  significantselling and sellers were giving up lots of price to  get  it  done.  All  ofthis and the breaking of the curved trendline spoke of  a  change  in  trendand strong institutional participation.                       Day 7 clearly defined a further  downside  move  whenit closed below the low of the last three days  and  below  the  last  sevencloses. The more lows  or  closes  the  higher  probability  of  a  move  indirection in the close. At this point the sellers were getting more  anxiousbecause that 148 low was  staring  them  in  the  face.  Also,  any  of  theaccelerators that were in position to attack the sellers were salivating.                       The hedge funds with married puts and the  specialistif he were short and in position to run the  obvious  148  inflection  pointand stops. Any option players that were set up to put pressure  on  AOL  andbenefit from a significant move below 150 could also help to accelerate  thedownmove.                       Go back and read this example several  times  so  youstart to think of what you are seeing. It’s not about memorizing a  pattern.You could look at ten identical head and shoulders tops but each  one  tellsa different story based on many of the things we have  pointed  out  in  theAOL example. When your skills improve you won’t even  be  thinking  patternsanymore just direction and the balance of buying or selling pressure.  Afterall, we only have to be right for several minutes.