Rev Shark: "Don't Confuse Cycles With Turns"
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Rev Shark: "Don't Confuse Cycles With Turns"
O que o Rev Shark escreve hoje neste artigo é tão simples, tão básico mas tão, tão verdadeiro e importante...
Um abraço,
Ulisses
"Don't Confuse Cycles With Turns"
By Rev Shark
RealMoney.com Contributor
3/5/2008 8:11 AM EST
"In all things there is a law of cycles. -- Publius Cornelius Tacitus, Roman Historian (55-117 AD)
One of the most important things to keep in mind about the market is that it does not move in a straight line. Within downtrends there are bounces, and within uptrends there are pullbacks. These gentle waves, up and down, within a larger trend, makes for good trading opportunities for those with a short-term time frame, but they are also very dangerous because they so often fool market players into thinking that a major turn is at hand.
Market players are predisposed to call market turns. Sometimes it feels like 80% of what we see in the media is focused on trying to determine when the market will change direction. Then as soon as we see a little counter-trend action the bigger picture is forgotten and hope blossoms over the chances that the major trend has now ended.
After the very negative news flow and sentiment of the last few days this market was primed for some sort of relief bounce. It is the nature of a cycle that one side will push too hard at some point and the market will react by springing back. That is exactly what started yesterday afternoon and is continuing this morning.
What is interesting about counter trend moves is that the market always finds some sort of news to justify the action. The continued saga of the bailout of bond insurers and some positive comments from Cisco (CSCO - commentary - Cramer's Take - Rating) was all that was needed to get some upside going.
Our job is to simply recognize what is going on here. It is an oversold bounce within a downtrend. It may last a few days and you can trade it if your time frame is short enough. However the important thing is that you don't rush to believe that there is some significant change taking place. Maybe that eventually will be the case but we need to demand more proof.
Unfortunately many folks are so anxious to call bottoms and turns that they will rush in on any counter-trend bounce. They ultimately end up as more selling fuel when things fizzle but their anxiety over being fully invested at the exact low usually causes much pain.
We have a positive open on the way as more talk about a deal for bond insurers is enticing some buyers. Given how well anticipated this deal is it is going to be very interesting to see if there is anyone left to buy when it is finally finished. "
(in www.realmoney.com)
Um abraço,
Ulisses
"Don't Confuse Cycles With Turns"
By Rev Shark
RealMoney.com Contributor
3/5/2008 8:11 AM EST
"In all things there is a law of cycles. -- Publius Cornelius Tacitus, Roman Historian (55-117 AD)
One of the most important things to keep in mind about the market is that it does not move in a straight line. Within downtrends there are bounces, and within uptrends there are pullbacks. These gentle waves, up and down, within a larger trend, makes for good trading opportunities for those with a short-term time frame, but they are also very dangerous because they so often fool market players into thinking that a major turn is at hand.
Market players are predisposed to call market turns. Sometimes it feels like 80% of what we see in the media is focused on trying to determine when the market will change direction. Then as soon as we see a little counter-trend action the bigger picture is forgotten and hope blossoms over the chances that the major trend has now ended.
After the very negative news flow and sentiment of the last few days this market was primed for some sort of relief bounce. It is the nature of a cycle that one side will push too hard at some point and the market will react by springing back. That is exactly what started yesterday afternoon and is continuing this morning.
What is interesting about counter trend moves is that the market always finds some sort of news to justify the action. The continued saga of the bailout of bond insurers and some positive comments from Cisco (CSCO - commentary - Cramer's Take - Rating) was all that was needed to get some upside going.
Our job is to simply recognize what is going on here. It is an oversold bounce within a downtrend. It may last a few days and you can trade it if your time frame is short enough. However the important thing is that you don't rush to believe that there is some significant change taking place. Maybe that eventually will be the case but we need to demand more proof.
Unfortunately many folks are so anxious to call bottoms and turns that they will rush in on any counter-trend bounce. They ultimately end up as more selling fuel when things fizzle but their anxiety over being fully invested at the exact low usually causes much pain.
We have a positive open on the way as more talk about a deal for bond insurers is enticing some buyers. Given how well anticipated this deal is it is going to be very interesting to see if there is anyone left to buy when it is finally finished. "
(in www.realmoney.com)
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