Tuesday, June 21, 2011

21 June 2011

 I expect the Dow to encounter resistance at this downward trending line.  If it breaks through with ease, it will then likely become support.
 Considering the McClellan Oscillator, we are not yet overbought in the short-term.  Today's reading was quite high though.
 Still oversold in the medium term.
Nearing overbought in the short term.

I have noticed that I receive a lot more hits when I become bearish and a lot less when I become "bullish."  When I started saying things were oversold about a week and a half ago, it could have been perceived as bullishness (and that isn't acceptable on "bear" blogs) or that I was wrong.  But guess what?  We are higher now than we were when I said that.  But, people have already stopped coming.  Thank you to the faithful.

Considering my current pride with calling this short-term turning point so far, I am going to remain cautious.  Pride cometh before a fall. 

It is very hard to convince the mind to do what seems like the exact wrong thing.  Therefore, I like to think trading is like picking fruit or driving on the highway.  You want to pick fruit that will look good in a few days - you don't care that it is green or hard right now.  It doesn't always work out, but your odds are a lot better if you think this way.

On the highway, if you see a red light in the distance, you should accelerate because the odds are that the light will change before you get there.  If you see a green light in the distance, you should throw your car in neutral and start coasting to save gas because it will likely be red by the time you get there.  It doesn't always work out because each highway is different, but the odds are better of what I described happening than the opposite.

I am frequently amazed at how few people think like this, and they stay full speed up until they are within 200 meters of the light and then slam on the brakes.  Whatever.. each person is blessed with the ability to think whether they want to or not.

Best of luck - and remember, my current pride is making me cautious along with the descending trendline of the major indices.

"The mark of your ignorance is the depth of your belief in injustice and tragedy. What the caterpillar calls the end of the world, the Master calls the butterfly."
Richard Bach

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