The market exists to screw the greatest number of retail traders at any given time.
I thought it was funny that I saw this today on StockTwits.
SPY weekly – does that look bearish to you yutes?
Yeah Cousin Vinny that does look sort of bearish to me.
For starters, didn’t all of us figure out about 15 years into our trading adventure that most chart patterns like the Ascending Triangle only work about 50% of the time in terms of forecasting future market direction?
If your big plan at making money in the market is trading the same old worn out cliche patterns that everyone else is trying to trade, you’re in for a big disappointment.
What I see is that Cousin Vinny went back to an arbitrary point in time in which he could draw an Ascending Triangle pattern. Let’s go back 2 years since we’re just picking arbitrary time spans:
It’s not an Ascending Triangle breakout. It’s an uptrend, a pullback in February, and a resumption of the uptrend. The market just went back into a strong uptrend which is largely being fueled by share buybacks in a few stocks that make up most of the weighting on the S&P 500.
Stocks transition through 3 patterns: oversold, continuation, and breakout. Breakouts are the worst chart patterns to buy because you’re always arriving to the party late. This is why Ascending Triangle breakouts often morph into breakout headfakes.
Don’t over think and over complicate charts.
What is the most messed up thing that the market could do to screw the greatest number of traders right now who are chasing SPY on the weekly Ascending Triangle breakout pattern? Come on, let the evil flow through you.
A headfake and plunge back below $287.50. All the Ascending Triangle breakout chasers would be destroyed.
I’m not saying I know that’s going to happen, but it could. What I’m saying is let’s not pretend like Ascending Triangle breakouts are some sort of predictor of future market direction. Ascending Triangle and Descending Triangle patterns are mediocre at best.
What’s more significant and bullish about the chart above is that after the $287.50 breakout, SPY fell back to test $287.50 breakout support and it held so that previous resistance became support. Watch $287.50 and get out quick if that level gets broken.
Senate Passes $854 Billion Spending Bill Funding Everything But Border Wall
The Senate, by a 93-7 vote, passed an $854 billion spending bill on September 18, the bulk of the funding going to the departments of Defense, Health and Human Services (HHS), Labor, and Education.
Chasing an Ascending Triangle breakout while the US debt level has spiraled out of control, what could go wrong?
Meanwhile, Twitter Troll Trump tweeted:
I want to know, where is the money for Border Security and the WALL in this ridiculous Spending Bill, and where will it come from after the Midterms? Dems are obstructing Law Enforcement and Border Security. REPUBLICANS MUST FINALLY GET TOUGH!
Excuse me but didn’t you say Mexico would pay for the wall?
Why is it Republican’s fault when Trump said Mexico would pay for the wall?
But what’s really stupid is that the argument isn’t over the ridiculous spending bill when we are $22 trillion in debt already. Nope, what’s ridiculous to President Trump is that we didn’t spend even MORE money for a wall!
You do know we’re screwed, right?
As soon as institutional traders decide to pull out the rug from under our feet, it’s over. They did it in February and then Cramer ran smoke screen that it was the short vol trade unwinding. Yeah, I fell for that too. It sounded so cool and knowledgeable to say but the truth is, when the Fed increased the number of rate hikes for 2018, the institutional traders sold and booked profits in a lot of high-flying stocks screwing most retail traders. Then, when everyone started buying bear market ETFs, they decided that they could screw more retail investors by putting the market back into an uptrend. Now they’ve taken the market back up and as soon as enough suckers chase on breakout patterns, they’ll do a February type move again!
You and I have to be smarter. We have to have an edge over institutional traders. Whoever still thinks, after all these years of trading and investing, that worn out old chart patterns like the Ascending Triangle breakout pattern is going to give them an edge against institutional traders that have enough buying/selling power to move entire sectors and markets, they must be a special kind of stupid.