Your comment on selling at ‘certain markers’ is more on the mark than you might think. Institutions and investors are creatures of habit beliefs, and those habits and beliefs cause them to act certain ways at certain times. As we have said before, understanding market psychology is a major key to success. That means knowing what levels institutions use as buy and sell signals. Trendlines, moving averages, price consolidations and the like all represent points where investors have bought or sold in the past and will be inclined to do so in the future. It is something of a snowball effect as we have noted before: once a price level is a selling point, it tends to remain that way until enough buyers decide otherwise. Trendlines and channels (the upper trendline connecting the majority of peaks on a move up) tend to be very accurate predictors of pullbacks and bounces during solid uptrends and downtrends. Thursday and Friday the Nasdaq tapped close the upper channel on the highs and then peeled back. It is now trying to hold near term support at March and August intermediate lows above the up trendline. That is not super solid; the up trendline is better support. Either one could trip the buy or sell signal for the institutions. Thus far the trendline has been the buy signal; trends tend to stay in place until they meet a stronger trend or something changes the outlook.
It seems uncanny at times how a stock or index all of the sudden stop its climb or its fall; when it does so on increasing volume, institutions are at work. Understanding that can happen and at what points institutions may be inclined to do so is so important. We think it is so important three of our seminars are devoted to understanding trendlines, moving averages, other support and resistance, volume, etc. You have to be ready as this subscriber was based on our bird dogging resistance levels. As we often say, understanding how to make money in the market is not overly difficult, it just requires you to think a bit differently. What that usually means is understanding where the big money is going to buy and sell. That gives you one of the edges you need.
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