- The market turn usually occurs after a surge of buying, and high volume, for tops. For bottoms, it is a surge of selling and high volume. We haven't had that high volume buying surge which I can say is a classic blow off. We don't necessarily need one to make a top, but more often than not, we do.
- The first 3%-5% dip after making the top can be bought for a quick trade, as long as the market is not a runaway bubble, i.e. Nasdaq 2000, crude oil 2008. This market isn't a runaway bubble.
- Once the blow off top is made, shorting rallies for the next 3 weeks after the top is very profitable. We have yet to have the blowoff, but once we do, shorting rallies till end of April will likely be very profitable.
- Don't get swept up in the momentum. Wait patiently for a high volume top and sell it.
Thursday, March 18, 2010
Momentum Markets
Here are a few things I've learned about trading momentum markets.
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5 comments:
Maybe these things have become too cliched and too known for them to work anymore. Maybe they don't work as well with bots ...
We are not anywhere near a "top".
IMO we will get a profit taking day or two next week. They will be bought hard and the advance will continue.
You should not be looking to short the profit taking day. You should be buying it.
Any advances from these levels will be quickly taken away on a pullback IMO. So I'd rather be short than long.
Owl....
is it time for me to sell the second unit yet or noe?
is the volume there?
I would wait. I think we're gonna close higher than current levels and probably gonna gap up. Just a feeling.
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