Quote from HolyGrail:
I agree. I just have to recognize these type of days quicker and adjust my style.
Buying early weakness/selling early strength is usually a good strategy, but if the bounce/pullback is weak, especially during the so-called dead zone, one had better get out. Look for the bounce--if there is no real bounce over an hour or two, that is sign that the trend is strong.
Strongly trending markets tend to move in tight channels, and there is little movement away from the trend; countertrend strategies tend to work well on days when the market bounces around. Trend days are rare; on an intraday basis, there generally is no trend, even in stocks like GOOG.
Another sign is how the market reacts when there is a new low after a period of consolidation. Look at today for instance. If it is going to be a double bottom, then the market should move swiftly away. If it does, the bottom will probably hold. If the market just hangs there for some time and does not bounce away, that is sign that the bottom is not going to hold. Buying new lows in that kind of environment is the proverbial catching knives.
If one loses money in the morning on a trend day, like I did, there is plenty of opportunity to make it up in the afternoon, as the trend tends to become even stronger late in the day.
