I'm going to short a rally up to the $52.00 area. Weekly chart = long term setup. Notice the gap.
Margo's Swing Journal
- Thread starter margo_trader
- Start date
This may not work but the risk will be low nevertheless. IMO, it's in the preliminary stages of a head and shoulders pattern. I'm going to take a low risk short on a move up to the $46.00 area. I'll take a small position and I'll give it a point or so or room.
I'm shorting this at the highs should it get there.
I'm shorting this at the highs as well if it gets there....too many holes.
Maybe between you is the break point.
Margo's strategy is simple... its shorting resistance and fading stocks near their relative highs.
In my opinion this is a good strategy soley based on whether someone really understands market conditions. In a bear market this strategy is great.. but in a choppy or bull market.. you will get toasted. The real trick is understanding what type of market you are in.
Personally, the easiest strategy that does not require too much of general market sentiment is trading the pulbacks in the direction of the stock's strong primary trend. This is because 70%+ of stocks will follow the broader market.. so in a bear market the majority of your trades would be finding the trendiest stocks... and shorting the bounce of lows.. and vice versa in a bull market.. The setup itself.. is a by product of the broader markets...
However, what Margo is doing.. is not.. thats why I think its more dangerous.. In my experience these types of strategy do not whether any type of storm.. so my advice to Margo is... keep doing what you do.. until it doesnt work anymore... and when the time comes (maybe not for another few years) be ready to buy the trendline breaks.. or else you will get destroyed.
For example.. look back prior to 2000 and see what would of happened using Margo's strategy. Then look back prior 2000 and see what would of happened if you were buying the pullbacks off all the stocks making higher highs.. After 2000 the majority of your trades would of already been shorting the lows...
just my opinion,
--MIKE
In my opinion this is a good strategy soley based on whether someone really understands market conditions. In a bear market this strategy is great.. but in a choppy or bull market.. you will get toasted. The real trick is understanding what type of market you are in.
Personally, the easiest strategy that does not require too much of general market sentiment is trading the pulbacks in the direction of the stock's strong primary trend. This is because 70%+ of stocks will follow the broader market.. so in a bear market the majority of your trades would be finding the trendiest stocks... and shorting the bounce of lows.. and vice versa in a bull market.. The setup itself.. is a by product of the broader markets...
However, what Margo is doing.. is not.. thats why I think its more dangerous.. In my experience these types of strategy do not whether any type of storm.. so my advice to Margo is... keep doing what you do.. until it doesnt work anymore... and when the time comes (maybe not for another few years) be ready to buy the trendline breaks.. or else you will get destroyed.
For example.. look back prior to 2000 and see what would of happened using Margo's strategy. Then look back prior 2000 and see what would of happened if you were buying the pullbacks off all the stocks making higher highs.. After 2000 the majority of your trades would of already been shorting the lows...
just my opinion,
--MIKE
Just a warning here.. this is very dangerous type of trading.. Just because a stock is strong doesnt mean its getting ahead of itself. Take a look at those homebuilders the past few years. I just want the traders that read this thread to understand that if we get a multi month/year bounce most of the chart patterns Mango illustrates will just break their resistance. You really need to understand the broader market.. a big mistake is looking at these chart patterns isolated from broader market conditions.
-MIKE