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43 Chapter 13: M-Type Tops  7/00 6/00 9/00 10/00 11/00 12/00 1/01 Figure 13.5 Throwback entry into a sell, Integrated Device, 150 days. Is it a right shoulder or a throwback? It doesnt matter; all that matters is the low-risk entry point it creates. show you how to combine this information with indicators to build greater confidence in your ability to recognize important junctures for stocks. KEY POINTS TO REMEMBER Tops are more complex than bottoms; hence they are harder to diagnose. The best known top is the head-and-shoulders. Three pushes to a high is a very common formation. The classic top shows steadily waning momentum. Wait for a sign of weakness. Look for countertrend rallies to sell. Potential M tops are listed each trading day on www.Bollin-geronBollingerBands.com.
CHAPTER WALKING THE BANDS We have talked about tops and bottoms, but what of sustained trends, perhaps the trickiest area when it comes to trade maintenance? The single mistake most often made with bands, envelopes, or channels is to blindly sell a tag of the upper band and/or buy a tag of the lower band. If such tags are parts of larger patterns, or are unconfirmed by indicators, they may in fact constitute buy or sell signals-but then again, they may not. There is absolutely nothing about a tag of a band that in and of itself is a signal. A good example of why a tag of the upper Bollinger Band is not necessarily a sell signal comes from the U.S. stock market. In June 1998 a severe correction got under way. We pick up the action coming off the lows in October 1998 (Figure 14.1) with the correction completed and a W8 bottom in place, the S&P 500 Index entered a strong rally phase that lasted well into the next
 year. This phase was characterized by any number of tags of the upper band-including one just eight days off the low. None of those tags were sell signals-at least for the intermediate-term player. Such a series of tags is called "walking the band," and it is a process that occurs frequently during sustained trends. During an advance, walking the band is characterized by a series of tags of the upper band, usually accompanied by a number of days on which price closes outside the band (Figure 14.2). During a decline, it is the lower band that is frequently tagged or undercut. These closes outside the bands are continuation signals, not reversal signals. They may become the first part of a pattern that leads to a reversal signal, but usually they are not in and of themselves reversals. Typically a pattern will develop with an unconfirmed peak or trough occurring inside the bands generating a signal, but such a pattern may not occur until after many continuation signals have been generated. The open forms1 of many volume indicators-especially Intraday Intensity (II) or Accumulation Distribution (AD)-are
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