10/23 Tuesday

(10:40am CT)

Before I explain what I mean by ‘Momentum Can’t Be Built in 1 Day’.  I want to update my current trading position.

I got in with Puts pretty heavily this morning after seeing the potential market crash.  You can read it on my $DJIA, $SPX, $COMPQ article that I wrote last week.  This morning we got confirmation of $DJIA and $SPX trip tops.  Also $COMPQ Head and Double Shoulders pattern has been confirmed for sometime now.

Looking at the overall market sentiment and overall $AAPL sentiment, I’ve decided to pull the trigger this morning pretty heavily.  I will be adjusting my stops along the way down but I might get out by end of the day today or tomorrow.  Doing pretty good for now.

So what do I mean by Momentum Can’t Be Built in 1 Day?

In any stock or ETF or the Indexes, you can NOT build momentum in 1 day and ‘go to the moon’ after 1 day of bullish rally.   It’s absolutely preposterous when someone suggests this and trade this way.

Why everyone forgetting the #1 Dow Theory (the guy who created the Dow Jones Index. Listen to him).  He said this.  “Trend is assumed in effect until it has given us the definite signal that it has been reversed”.  So tell me, do we have DEFINITE signals that it has reversed on $AAPL?  No…

We didn’t even break 10EMA yesterday with fair volume and you are celebrating the bulls…

Guys c-mon. You got to trade smarter than that. $AAPL has been in this bearish trend for about a month now and many reversal signals at the top and also with weekly reversals such as bearish divergences.   So we got to be more cautious to when the trend is broken and when the trend is starting.

Do not just look at daily price action but look at the past price levels and look at in the broader view of things and what is to come. Pay attention to these reversal signals.  Market tells us what they want to do and you have to read that. And that’s exactly what the technical analysis is all about.

You know how when you are in a relationship with a girl or in marriage, she doesn’t always tell you what she wants. But as a husband or a boyfriend, you have to read her and see what she is looking for.  Many times we men does not read her well and we get scorned.  The better you become at reading her (market) the better trader you are going to become.

Stock never goes straight up or never goes straight down so then you understand that we are going to have up and down movements through out the day or through out the week.  So how do we read overall sentiment.  That’s the trend we are talking about. People always say ‘follow the trend’ but people have no idea what that means.

Yes we had huge bullish move yesterday but what’s was the overall sentiment on $AAPL even with yesterday’s candle.  BEARISH.  You can not forget that.

You are not a good trader, if you are shouting HELL YEA LETS GO TO THE TOP every time we see a short-term retracement/pull back move as it did on 9/27, 10/16, and yesterday 10/22.

You know what, maybe the ER could fix all of it.  On Friday morning, we see a 50 points jump up and overnight the momentum can change.  That could happen yes.  But they keyword is ‘COULD’.  We do not know that until Friday morning, right?

So currently you can not say that the trend has been broken or the reversal has came into place because the fact of the matter is it has not yet.

We are STILL in bearish trend until it gives us definite signals to state otherwise.

Hope this helps and hope this gives you an insight.

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My Bearish Trade Since 9/26/12

http://2tradersclub.com/aapl-bearish-divergence-warning-daily-weekly/

10 Reasons Why I’m Extremely Bearish on $AAPL until the ER

http://2tradersclub.com/aapl-10-reasons-of-why-im-extremely-bearish/