Corrections are sudden and vicious
So as anticipated correction is finally here. All moves at some stage correct. The trick is to capitalise as much as possible from the move higher and then anticipate correction zone and be vigilant and act quickly. As I said in the morning corrections are sudden and vicious especially after a long up move.
Nothing matters to market as long as they are rallying. When traders get comfortable making 4-5 dollar profit on day move and dips get repeatedly bought, a false sense of confidence can develop. The kind of vicious move developing today must have caught some rookies by surprise.
The interface where markets turn from bullish mode to correction mode are the most dangerous. There is no fun in building up your account 50% plus in a bull move and then giving up 20 to 30% of it in few days. That is one of the reason I pay close attention to the 65 day bull /bear indicator.
Nothing matters to market as long as they are rallying. When traders get comfortable making 4-5 dollar profit on day move and dips get repeatedly bought, a false sense of confidence can develop. The kind of vicious move developing today must have caught some rookies by surprise.
The interface where markets turn from bullish mode to correction mode are the most dangerous. There is no fun in building up your account 50% plus in a bull move and then giving up 20 to 30% of it in few days. That is one of the reason I pay close attention to the 65 day bull /bear indicator.
Posts
6 comments:
There are a lot of people tossing around the word "correction" pretty cavalierly. Today is not even a 1% down day from yesterday's close, and at the moment we're holding above the levels we consolidated at from mid-Dec to mid-Jan.
Are you anticipating more than a day or two of action to the downside?
Personally, I'm anticipating another bounce up in the next few days, and for 1420-1430 to hold as support. Today's not fun, especially since I had one bad trade in particular, but it is not gonna wipe out my gains for the week – yet.
Anybody else catch the easy money bottom in the Russells? Down to S3. Good times.
More chop is all it is. But there does look to be longer term distribution going on here. Still I think we have an above average shot at new highs in the intermediate term but I think it will be an choppy month.
New to trading - please explain what the 65 day bull/bear indicator is - google did not yield anything. Thanks
Number of stocks up 25% or more from their 65 day low
100 * ((C + .01) - ( MINC65 + .01)) / (MINC65 + .01) >= 25
Number of stocks down 25% or more from their 65 day high
(100 * ((C + .01) - (MAXC65 + .01)) / (MAXC65 + .01)) <= ( - 25)
These are formulas for the indicator in TC2007 software.
So, what is "C"?
Probably closing price. I believe Pradeep uses TeleChart software.
Post a Comment