I’m often asked…”What gets a trader past the learning curve? What happens to that trader?”
The answer is experience.
You might not like that answer because it’s vague so let me expand on it. New traders don’t see everything, they see one or two things and make decisions on what they see. Remember learning to drive? You the end of your hood, then you see more. After you gain experience, you drive miles without thought…but you “saw” everything. Trading experience is the same.
The more distinctions you can make, the more trading opportunities you will see.
This is not your October 2014 stock market correction because there is more going on than simply what you “see” on the charts. To succeed in this tape you need to see more.
Tuesday recap: US Equity markets have started the week with the same indecisive volatility we’ve seen the last 4 weeks. For the most part broad market averages are near the midpoint of their range over the last 4 weeks, although last week’s “Pre FED” 2½ day rally looks to have created a false breakout of the triangle formed since the August 24 and 25 lows.
It’s not unusual at all to have a false breakout from a tightening triangle or pennant formation that fails before reverting back to the previous pattern and eventually breaking in the opposite direction.
With the Tuesday stock market sell off holding the S&P 500 1925 level, the pattern that was a tightening triangle is now potentially a flag, but let’s be clear that it is a bear flag anchored on the 5 day sharp break in the market from August 19 to 25. That break was accompanied by very heavy volumes during late August when volumes are typically very light.
This is clearly the sharpest sell off we have seen since last October, and although market averages have held the October 2014 lows, we have not had the V reversal that last October took market averages back to new highs within 3 weeks. Be advised that true Bear Flags get resolved to the downside, and we’re not there yet, but it certainly feels that a test of the August 24 and 25 lows, as aberrational as they may be, is in the offing.