This entry was posted on Sunday, September 9th, 2007 at 9:37 pm and is filed under Education, chart patterns, links, market commentary. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.
Well that sure makes trading this week easy. Go short at Mondays open. Because “stocks are expected to extend their losses next week”. Man you can’t make this stuff up. Ok I am not saying they won’t be right but I’d put the probability at just around the levels of a coin flip. Certainly headlines such as these encourage average investors to make emotional decisions after having seen an erosion in their 401k values since mid July - but create opportunities for astute swing traders with an eye on statistical probabilities.
As always look for clues of potential intermediate turning points in emotional “guaranteed” markets that can catch the crowd leaning the other way - such as:
- those sharp up turns that leave extreme high volume footprints behind
- solid and wide reversal patterns such as inverted head and shoulders
- diamond bottoms
- double bottoms - (support)
- triple bottoms - (more support)
you get the picture.
But most likely these reversals happen after punching through an obvious area everyone is watching such as recent support or a important trendline. Be especially vigilant after gaps through these key areas. You can see a couple obvious ones as we head into this week.
So instead of fearing periods like these. Relish them because invariable one side of the boat just gets a bit too crowded. You must stay vigilant and strike when the odds (not the headlines) are in your favor and the lemmings decide they are on the wrong side of the boat.
Have a Great Night!
Dave Johnson
September 14th, 2007 at 11:12 pm
[...] Monday morning I posted headline that caught my eye. Remember last weekend? What were we worried about? Growth Fears. Thats right. Time to go short [...]