By All About Trends
The following is an excerpt from yesterday’s premium report by All About Trends. Enjoy a free 15 day trial to their service and receive daily stock picks, market analysis, and a complete trading plan.
When I look at the daily index charts below I can’t help but think of the old eastern Zen phrase of EASY GRASSHOPPER. We all know grasshoppers always want to jump so it’s a pretty fitting phrase for those who have a hard time managing their emotions considering the indexes just jumped into new highs in the form of a news driven event AFTER we’ve been gapping up pretty hard here the last few weeks.
Take a look at the daily index charts below.
All week we’ve been saying:
“Does the market take a breather and digest the gap and then make another gap higher to retest the ultimate highs? If we are going higher to retest the highs then that’s what it needs to do here for a few days.”
We all got the answer to that compliments of uncle Ben’s wild rice gang’s press conference yesterday which you guessed it led to a big gap up. Think “Now that we’ve got that all out of the way” and along with that comes “We now return you to our regularly scheduled programming” and that is?
We’re overbought and stretched with us being nowhere near and type of support zones we can work with here. Let’s not forget about the V bottom which are very unstable patterns by the way.
And then there are those grasshoppers that want to buy because they see wow the market broke into a new high so we gotta buy because the talking heads are highly emotional with glee. Let cooler heads prevail. Listen to the market and not the opinions here for a bit. Buying here IS bus chasing plain and simple!
Let’s also not forget that you are buying AFTER we’ve run for two weeks with the bulk of that run taking place in the form of gaps up (which create air pockets on the way down you know). And while I’m on the subject of gaps? More often than not the market gaps and after the dust settles it goes nowhere or drifts down.
So you see buying here is super late to the party and being a grasshopper. Don’t forget bus windshields have a tendency of pick up grasshoppers and not in a good way. So CAUTION over the next few days is advised!
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