Michael Baker falls off a Cliff

Dec 16, 2007: 1:03 AM CST

Hopefully the human Michael Baker has not fallen off a cliff, but the stock/company (BKR) has indeed done so recently.

We saw a prior healthy uptrend that took prices into the ‘stratosphere’ via the three impulse day move of early September.

As usual, ‘what comes up must come down’ and so we have the reaction to that impulse following a ledge or consolidation pattern.

The break beneath the key moving averages was extremely severe.

Notice the Broadening Formation (which is often a bearish formation) that was created throughout September and into November.

This is a classic example of how ‘dangerous’ broadening formations can be, as they highlight the epic struggle between buyers and sellers that often resolves in the opposite direction in which it was created (up formations resolve downwards).

Never underestimate the potential of a reversal formation and ALWAYS use protective stops if you thought price would be going higher and traded that thought.

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