?.. say what?
You heard me right. Let me explain by example, and then why it is the case:
It Worked great for USRX this time. The buy recommendations started coming in in force above 70-80. I looked at the charts, set my goal for 83 and sold at 84 (I did'nt own any, buy I still played USRX. It was good practice). That's the way I called it and I even posted to SI when I did.
Who do you think has been buying up those cheap shares when we were below 60? The average investor? Nope. A large percentage dumped when things turned sour. Now we have a price run and a bull trend, the institutions see a technical and fundumental top coming, and they scream buy. Now the little guy jumps back in (at the top I might add), while the pros are dumping into the emotional frenzy of the current market.
It's documented in A WINNING PROGRAM FOR INVESTOR & TRADERS
by Thomas Meyers
This is also explained quite well in TRADING FOR A LIVING
by Alexander Elder (A medical Doctor of Pyschology).
It is a fact that letter writers follow trends because they are concerned that they will loose subscribers by missing a major move.
This is good business. The longer a trend continues, the louder the writers bark. They are most bullish at market tops, and bearish at bottoms. Who was saying "USRX is a screaming buy" when it was 40? The majority sure was'nt! In fact I'm hard pressed to find anyone who was that did not have a vested interest in USRX! Look at the networkers...My god, even CSCO was being trashed at the low!
These facts of human psycology have evolved into a set of T/A indicators known as Commitment Indicators, that include the monitoring of several groups of investors. It pays to track the actions of the groups, and not what the groups are actually saying.
Let me ask you (the thread) something:
When was the last time you read in the Wall Street Journal, or other major publication to sell a stock??? I can't remember myself, but I can name a few buys just from today's journal alone! What does this tell you? Who is going to sell you all those "buy" recommendations? Other traders? The educated profession traders will! The mom+pop IRAs and the majority on this and other SI threads will be in there buying though!
PRB |
