Most modern day technical analysis is based on prices, so the moving averages going up gets people bullish. Most people always blindly follow prices with no context of any other technical factors. Like have there been selling climaxes or has there been a change in the big trend. So a rally in prices will lead to “confidence” in higher prices, and a selloff will lead to “acceptance and belief” in lower prices. It’s called extrapolation, and it’s a lousy way to view markets. There are extremely few people who do well in markets by following stupid moving averages. This behavior is similar to the way an ant colony follows the pheromone trail, even if it leads to death. And that’s the same deal as most market participants and their moving averages and their idiotic extrapolations. Their trading accounts die. We saw it on December 15, 2016 in the lows in gold. We saw it on January 3, 2017 right smack into the highs in the US$. And recently we saw it right smack into the upthrust highs in the Euro on January 27th – the spring lows in the $ on January 27th – the spring lows in the stock market on January 27th – the accumulation lows in crude oil around January 20th. And today we saw it right into the upthrust in energy shares, when numerous calls were being made about the crude oil “breakout” (extrapolation) this morning, which was actually an upthrust in the making. These recent turning points required anticipation, not extrapolation. Our subscribers were alerted, ahead of time, to anticipate the likelihood of at least tradeable turning points. In the US$ it was actually a major turning point. Is it easy to anticipate turning points? No, it’s extremely difficult and we blow it sometimes, but it’s a much better approach than mindlessly extrapolating.
About traderscott 1146 Articles
Trader Scott has been involved with markets for over twenty years. Initially he was an individual floor trader and member of the Midwest Stock Exchange, which then led to a much better opportunity at the Chicago Board Options Exchange. By his early 30’s, he had become very successful in markets, but a health situation caused him to back away from the grind of being a full time floor trader. During this time away from markets, Scott was completely focused on educating himself about true overall health and natural healing which remains a passion to this day. Scott returned to markets over fifteen years ago where he continues as an independent trader.
6 P’s brother?
Great thoughts on understanding the fundamentals of markets and how this helps us be better at proactive trading with clearer objectives and a better overall “approach” instead of assuming/hoping/guessing because one’s approach isn’t a very well rounded, maybe riding a one trick pony, or following some of the the market’s dip sticks(you know the word I’m really thinking?)
The word you’re thinking is Cramer.
And yes the 6 P’s is another term for the “secret” to some success in markets – hard work.
“Bear sterns is fine!” Buy buy buy!
You saw my post at ZH, I couldn’t fit all of them in the post.