Confusion about markets in "Trading the Measured Move" by David Halsey

[timothylee]

When there is buying pressure, price continues to rise. When there is selling pressure, price continues to fall.

In "Trading the Measured Move", author David Halsey says quite the opposite:

"Markets continue to rally because they are fueled by sellers at highs. Markets will stop making new highs when the very last of the bears turn bullish right at the highs. Without sellers at highs, the market has no fuel to push through to new highs. This is where we get the saying, "The market climbs a wall of worry.""

This looks wrong. Is the author peddling nonsense or is he saying something profoundly important?

 

[maxinger]

Simply delete all the things you have read, and do your own analysis.

A lot of professional writers and professional talkers and traders didn't spend thousands and thousands and thousands of hours analyzing charts.
There is simply no short cut.

 

[Millionaire]

"Markets continue to rally because they are fueled by sellers at highs. Markets will stop making new highs when the very last of the bears turn bullish right at the highs. Without sellers at highs, the market has no fuel to push through to new highs. This is where we get the saying, "The market climbs a wall of worry.""

This looks wrong. Is the author peddling nonsense or is he saying something profoundly important?

It is partially right. Obviously to push prices higher there are still buyers (longs) as well, the short covering by the bears just increases the buying on top of the other buying by the bulls.

At the top everyone who wants to be long is already long and the shorts have all covered. Hardly anyone left to buy.

 

[speedo]

The most valid stuff you can get from Halsey is where to anchor for buy/sell zones and extension targets.

 

[tommcginnis]

The concept is 100% bullshit.
It's right there with the idea that the markets rise when "bulls are in control." Utter nonsense.

Markets rise because of a quantity imbalance of D>S.
Markets fall because of a quantity imbalance where D<S.
No magic involved.

Ultimately, https://en.wikipedia.org/wiki/Consumer_sovereignty

EOF.

 

[VEGASDESERT]

whatever, he's basically saying bears that try to pick tops get stuck and have to
cover adding more fuel to the rally..

but if you can't quantify it, who cares.

 

[tommcginnis]

whatever, he's basically saying bears that try to pick tops get stuck and have to
cover adding more fuel to the rally..

but if you can't quantify it, who cares.

A bear covering a horrid, underwater, short position is not a bear to the market, but simply a blood-covered, embarrassed, bull. The market don't care what your reason for buying is -- if you're buying, it's because you expect further climbs. You're a bull. Not complicated. "Deserving", p/e, sentiment, T/As -- none of it matters.

 

[Laissez Faire]

I'm sure markets can rise just fine without short sellers.

Short sellers needs to cover their losses when the market rises. This is often done using market orders and thus adds to the buying pressure as they may compete with aggressive bulls as well.

The total of this buying pressure (market orders!) increases prices if there's not sufficient sell side liquidity (sell limit orders).

 

[SunTrader]

Although there are always exceptions mom and pop short sellers may use market orders but serious short sellers do not.

 

[panzerman]

The concept is 100% bullshit.
It's right there with the idea that the markets rise when "bulls are in control." Utter nonsense.

Markets rise because of a quantity imbalance of D>S.
Markets fall because of a quantity imbalance where D<S.
No magic involved.

Ultimately, https://en.wikipedia.org/wiki/Consumer_sovereignty

EOF.

While this is a true statement, it's far too simplistic to develop a trading strategy around. Specific rules need to be applied to this macro view. In fact, algorithmic rules generally these days. Intensive analysis is needed in order to develop such a positive expectancy method. That is where the "magic" happens.