Thursday, February 1, 2007
When is a Breakout is Confirmed?
I use the close for two consecutive days over the breakout / trend turning point level as a confirmation. So often in the past few years, a breakout is met with heavy selling by beefers that day or the following day. I think the program traders' computers hit those automatically, so only a very strong breakout can push them aside in one day. Or a "breakout" can just be beefers trying to run stops, hence false. Last week's breakout was hit hard the following day. The "second mouse" pattern that I wrote about a few days ago uses this caution as a trading / investing tool. Yesterday's S&P move over the ascending triangle upward break line might be the second mouse move. A close over that line today would confirm the second leg / second phase move is underway. Still holding 150-200% long & strong.
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2 comments:
Hey Krypto, Scottie from Shark investors here. Regarding you long and strong comment, I have believed for a while that the only reason the market is going up is because of our oil money going out, and no other place big enough to invest that money other than our market. Bill Gross's comments here - http://www.pimco.com/LeftNav/Featured+Market+Commentary/IO/2007/IO+February+2007.htm
seem to confirm my thinking. Need to keep an eye on these flows to see the continuation or ending of this phase of the bull.
Scottie
Thanks scottie - will read it. I think it's index fund money mostly. Disinflation & slow growth can produce strong, lengthy bull runs .... until the news changes. I keep thinking, "hold on, nothing has changed" when the beefers play ping pong with the ETFs and futs. Hence I am waiting for some news to cause the funds flow to change.
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