Freep, I agree with your chart observations on MSFT
But I think many here make decisions on more than just the charts (especially the contrarians <g>)
I think we have two types of traders on this board (actually we have many types, but I'm purposely oversimplifying it for the purposes of this discussion): those that "let the trend be their friend" and those that attempt to pre-emptively anticipate trend changes. The first type will wait for a stock's price movements to change direction before closing or reversing a position, and they might rely on a variety of indicators to help them like moving average crossovers, MACD, stochastics, etc. The second type try to anticipate changes before they occur based on their experience and on their perception of how exterior events will influence the market. The latter might have, for example, went long on 9/10 thinking there would be no terrorism on 9/11 and thus today we'd get a July 5th-type rally, and another example is when people when short ahead of the last FOMC betting on no rate cut.
I believe that Johnny's MSFT trade is in the latter category because he is anticipating a rally into options-ex week beginning tomorrow and ending sometime Tuesday. He probably also noted that MSFT is currently below max-pain of 50 and that, as mish has mentioned numerous times, IBM is likely to reach max pain sometime next week. If I remember correctly, mish's most recent chart shows that the reliable max pain issues (MSFT, QQQ, INTC, CSCO) more often than not reach max pain on Monday or Tuesday of max pain week.
iqauto.com
Of course people who trade in anticipation of events can get blindsided just as trend followers can get blindsided by unanticipated external events. Those who went long late this afternoon might wake up to a down market on the HON news or because of bad consumer data or Michigan sentiment tomorrow.
I'm not meaning to speak for Johnny, of course, but that is what I was reading between the lines in his post . . .
bcrafty (who has often been known for putting two and two together and getting three) <g> |
