That is the question that is mostly asked around the dinner table. Maybe you’re bullish, expecting the market to go up perhaps on an exuberant wild rally or maybe you’re bearish expecting it to go down perhaps on a steep 7-10% correctional decline?
Expectations are a belief that is centered on the future. It’s widely known that the market trades ahead of itself. Some believe at least six months ahead, which means we need to trade in the future. Huh? How do we do that? We need to make financial decisions on what we believe is going to happen. Are we supposed to be so highly intuitive bordering on psychic to be successful investors? How are we supposed to know what is going to happen in the future?
When we watch a movie for the first time, we don’t know how it’s going to end? We can guess who the killer is and we can guess if it will have a happy ending or not. Sometimes we’ll guess right and sometimes we’ll guess wrong. Just like an unpredictable movie, the market trades in the same unpredictable fashion. Following the trend is always the high probability trade, until the trend changes.
Every day, people ask me what I think about a stock. Do I think it’s going to go up or down? I don’t want to think and make a guestimate; instead I want to look at the chart from a technical stand point, find the strongest levels and be bullish above those levels and bearish below. I’ve been known to call a lot of moves in the market. So much so that some of my students really think I have a crystal ball. We all have a crystal ball; it’s in our time and sales window. Once you learn how to read it, you will know what the future holds for that particular stock or for that particular index, sector or even for the entire market. I call them the prints. Every transaction on a stock is printed in our time and sales windows. I look for the big ones. The trades made by huge hedge funds or giant investment firms like Goldman Sachs. These are the big guys, dressed up in their Armani suits, smoking Cuban cigars. Well, that’s the visual I get when I see these big block trades. No expectations, no thinking, just follow the Armani suits, and you’ll follow the smart money. Happy Trading, The Stock Whisperer
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