When a technical indicator tells you that the stock is going to fall
don't believe it
don't go short
instead.....just wait!
My experience is that more often than not
stock rises further!
Reason?
Our nervousness
our anticipation
our expectation
our eagerness
our readiness
makes us
prematurely
over-read
over-estimate
the technical indicator's indication!
Also, if the money is simply pouring into the stock
the momentum simply stretches the rally!
The difference between a pressure cooker and the overheated stock market is the difference in their vent valves!
The vent valve whistle of the pressure cooker blows at a fixed pressure limit.
The one in the stock market is different
It just turns red (overbought) and nothing more!
Also, when you see the overbought signal
millions other are seeing that too!
and so are the "big pockets"!
so, what do they all do?
A mental game starts.
The "big pockets" close their eyes.
Many don't see the signal.
many who see the signal simply ignore it.
many ignore it because they see many others ignoring it.
Gradually, everyone has his foot in his mouth
.....the pendulum has gone too far!
That is the time when nobody wants to buy
but nobody wants to sell either!
Stampede is about to start
but delayed by some more fools!
and then it starts!
Even then it doesn't always crash under gravity!
But the pendulum surely starts its journey backwards.
That is the time when the indicator gets the respect.
So, my experience is that
take the indicator as a yellow traffic signal
and not the green one!
Wait for signal light to burst!
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