Common market wisdom is just plain wrong  

Posted by Book Eater in

The game of speculation is the most uniformly fascinating game in the world. But it is not a game for the stupid, the mentally lazy, the person of inferior emotional balance, or the get-rich-quick adventurer. They will die poor." ~ Jesse Livermore

A good practice is to periodically during the trading day make note of our thoughts, feelings, and physical sensations and correlate those to market behavior at the time and to our trading decisions and outcomes. Over time, you will notice distinctive patterns: certain constellations of thoughts, feelings, and sensations that recur under challenging trading conditions. Once you observe your own anxiety-related patterns and actually see how they’re interfering with decision-making, you’re in a much better place to interrupt and change those patterns - Brett Steenbarger, Phd

Lesson: Do your homeworks. Control those emotions.

US market traders are asking themselves whether yesterday's performance of dropping 168 pts from its intraday high closing down 10 pts is an ugly gap up failure.

Rob Hanna shows the light. According to, He says if you thought today looked bad and you were worried about the market going forward because of it – you shouldn’t be.

Reasons are :
1.) The Nasdaq 100 had 52 occurrences since 1986 where market gapped up over 1% and then finished negative on the day. 54% of which closed higher the next day.
2.) Chance of being up on any day over the period was also 54%.
3.) Over next 3 to 5 days, NDX has a 55.5% and 56.5% chance of closing higher.
4.) Average gains over the period: 1 day following, market goes up .4%, average week - 1.3% gain. These are higher than normal days of 1 day average up of .3% and 1 week average up of .6%

Comments: Of course, let's not discount that the panic selling in the US was partly because the 100 USD oil may be inflationary giving FED a harder time to cut rates. Also, the study here does not discount a bull market trend. BUT AREN"T WE ALSO IN A BULL TREND? we havent broken the 20 month MAs anyway? For those who attended the CAF, they can relate why i'm saying this hehe.

My side comments on the Philippine market:
People who traded GEO were probably panicky today. They may be asking.. Why did it close at the low? Why did it close at 1.30? Is this a sign of weakness? Same goes for the other Angping stocks.

My Answer:
Those who are trading GEO should be well aware that this is a stock that is heavily market manipulated. It had extension gains awhile ago amid the 168 pt drop of the US. It was very tempting for profit taking. What's notable is that it broke the 1.42 resistance. That means, this will trade higher up for the next few days.

My recommendation:

Buy the dips, hold on. Don't panic. As one trader did advice: Trade confidently and cautiously.

Ask yourself: Did it hold the support? YES! 1.30 was the support of GEO.
Was there significant volume? YES! almost same as yesterday's volume.
Was average buying price today higher than yesterday? YES! 1.39 is the average buy price today.

So I ask..anyone who doubted GEO...technically speaking of course...kasi kung fundamentals ibang usapan yan.

WHY did you sell your GEO shares? near the lows?

And if you sold at the 1.40-1.46 etc. Good for you. I hope you bought them back at the 1.30-1.32 prices awhile ago.

Don't panic.

- Nix

0 takes

Post a Comment