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Strategies & Market Trends : The Art of Investing
PICK 44.61-2.7%Nov 4 4:00 PM EST
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ajtj99
sixty2nds
To: Sun Tzu who wrote (10404)10/24/2025 10:35:10 PM
From: Sun Tzu2 Recommendations  Read Replies (1) of 10521
 
Upon looking that the SGMT chart I see a demonstration of another point that I talked about but did not highlight on the chart.

At the red vertical marker I closed my position. This was a valid sell as I outlined the rules, but it was not a short sell because the red rail was still rising (albeit very gently). I just closed my position.

However, if you look carefully, you will see that about 8 days later, the stock approached the red rail again and then it dropped.

This demonstrates why you should not go against the rail. Because 80% of the times the stock will go back to it. You will be taking unjustified chances.

However, at that point the stock was actually a short sell. I didn't short because frankly in a bull market it is not wise to short anything. And secondly, it is not wise to short a biotech unless bad news has been let out (in which case you are unlikely to beat the market to the punch anyway). But if this had been another stock, say a consumer staple or HMO or ... then it would have been a strong short candidate 8 days after the red vertical bar.

The same rule applies to buying the stock at the green rail. You don't want to buy it while the green rail is falling.

Of course, these are all based on the pure TA. If you happen to know the company or have deeper insights into the stock, then by all means do what your gut tells you to.
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