Sometimes the trend is not so easily spotted. Whipsaw action and fakeouts are the name of the game. You can counter those by either going for a walk or if you choose to trade by paying careful attention to the technical indicators.This large green candle on the QQQQ looks strange coming right after a longish low volume red candle. I view obvious fakeouts like this as an ideal place to do the opposite---go short. I only use the QQQQ as a guide for the market strength and don't trade it.
A little while later you can see the QQQQ is down to lows again. Here it pops up on no volume and just hangs there. I watched for many seconds and no trades went by. HHmmm smells like manipulation to me.
3rd chart shows a little more later it has returned to lows with gusto. A trend made up of quick down candles followed by no volume pops or counter uptrends tells me the general trend is more down than up. Now find a stock that is trending like BIDU shown below and trade it.
1 comment:
Fakeout schmakeout... just reel me in already.
You mean 'looks strange' as in this big green bar seemingly came out of nowhere? My thought was - is this the beginning of the turn around?
I suppose a legit turn tends to show 'smoother' action? Big candles changing to smaller candles before powering up?
What you are saying makes sense. Especially in hindsight, after the 12:00 long green on moderate volume failed. That probably should of screamed short for the rest of the day.
Good stuff. Thanks.
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