It Is Time To Get Bearish
Posted on December 19, 2007
Filed Under Profitable Trader |
This is not a good market to be in right now. The problem is that the recent rally attempt is beginning to show signs of trouble. Many of the top performing stocks this year have failed to confirm this rally. AAPL, BIDU, and GOOG were all in the process of forming bases but these have all failed to materialize. My latest long PFWD also failed but due to my stop-loss I was saved from a huge loss. Whenever the general market is in a correction you can’t just sit and wait for the market to turn around before you start looking for stocks to buy . Market corrections are actually the best time to do your stock research. This is when top performing stocks will form proper bases, cup with handle, saucer, double bottom, ascending triangle, flat bases…this is when you can concentrate on building up your watchlist so when the market does rally, and it always will, you will be ready.
Here is my latest position. I don’t see a lot of strength in the market right now and to paraphrase the great Jesse Livermore, if I can’t see myself going long than the obvious choice would be to be short. Here is a chart of XOIL. The index is officialy in a downtrend signified by the downward channel. You can see the pattern of lower highs and lower lows. I started shorting yesterday off the rally met resistance at the upper trendline. I will cover if the price jumps outside of the upper trendline.
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