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Biotech Starts Recovery As ETFs End Day Firmly In The Black
I am always amused when people label something as the start of a recovery after seeing a day or two of market movement. It could be so or it could be the same as the last two dead cat bounces especially if the broader market turns south. This is where some relevant charting can be used to get the situational awareness I referred to in an earlier post today. This allows one to make probabilistic decisions.
This is a technical chart for IBB with some of the most common indicators.
This sets the moves in context. The trend is downwards and as usually happens the price keeps bouncing down the lower bounds of the channel (2x SD). These things can't really predict anything but keeps the current moves in context.
It could fall down again like the last two times or it could really be the start of a significant move up. Different people bet at different times. Some at the first bounce back, some just before the 200 SMA because often it is a strong resistance, some after it comes back up over the 200 SMA and some after seeing a confirmation, for example, moving above the 20 or 50 day SMA. There is no right or wrong decision except in retrospect.
However, this can be very useful in assessing potential upside/downside and make bets accordingly with the right stop limit suggested by the chart in case the expectation is not met. The gains come from making that bet being right not mysteriously predicted by the patterns.
It is better than looking at a day or two of market action. The context can be useful in bettering the odds for the entry (or exit).
I am a firm believer ... entry has as much, if not more, to do with success in a special investment position than when to exit. For me the entry is the harder of the two.
I started to get a green light on April 7th. However, I need three to complete before I'd be buying. Not quite there yet. Now waiting on the 3rd.
Comments
This is a technical chart for IBB with some of the most common indicators.
This sets the moves in context. The trend is downwards and as usually happens the price keeps bouncing down the lower bounds of the channel (2x SD). These things can't really predict anything but keeps the current moves in context.
It could fall down again like the last two times or it could really be the start of a significant move up. Different people bet at different times. Some at the first bounce back, some just before the 200 SMA because often it is a strong resistance, some after it comes back up over the 200 SMA and some after seeing a confirmation, for example, moving above the 20 or 50 day SMA. There is no right or wrong decision except in retrospect.
However, this can be very useful in assessing potential upside/downside and make bets accordingly with the right stop limit suggested by the chart in case the expectation is not met. The gains come from making that bet being right not mysteriously predicted by the patterns.
It is better than looking at a day or two of market action. The context can be useful in bettering the odds for the entry (or exit).
I am a firm believer ... entry has as much, if not more, to do with success in a special investment position than when to exit. For me the entry is the harder of the two.
I started to get a green light on April 7th. However, I need three to complete before I'd be buying. Not quite there yet. Now waiting on the 3rd.
Old_Skeet