How To Tell If A Stock May Be Topping And What To Tell Your Wife If She Catches You Looking At Girls In Bikinis
Dave Landry is principal of Sentive Trading, a money management firm, and a
principal of Harvest Capital Management. Mr. Landry is the author of two top
selling books,
>Dave Landry’s 10 Best Swing Trader Patterns And Strategies and
>Dave Landry On Swing Trading.
If you would like a free trial to Dave’s Nightly Swing Trading Alerts Report
at=st”>click here or call 888-484-8220 ext. 1
Early Warning Sign?
As I wrote in Dave Landry’s 10 Best Patterns And Strategies:Â
Markets
forming tops after a strong trend often have a sharp sell-off and then
make one last attempt to resume their longer-term uptrend. This resumption
is caused by bargain hunters buying at what they
perceive to be low levels and by shorts
taking profits (buying to cover). And, it can be accelerated by
shorts being squeezed out. However, this action often exhausts itself
before the market makes it back to its old highs. When this occurs, a true
top is then formed. The Gatekeeper is a reversal pattern that seeks to identify
when a market has completed this one “last gasp.” The great thing
about this pattern is that the risks are fairly well
defined (at worst, the old highs) but the rewards can be great when the
occasional big-picture top (or bottom)
is caught.
With the help of Fibonacci expert
Derrik Hobbs, I further discovered that the “last gasp” often stops
right at the the 61 to 78% retracement of the prior correction. This is the
basis of the Gatekeeper pattern.Â
The great thing about this pattern
is that it often warns you that trends may be coming to an end. Notice below how
metals & mining stalled out right at these levels.Â
The energies, especially on an individual basis,
are beginning to form a similar pattern. Watch to see if they stall out at these
levels. If they do, they could provide some shorting opportunities.Â
Watch my audio/visual presentation recorded
earlier today for a further explanation of trading transitions (e.g. The
Gatekeeper). In it, I also discussed current market conditions, where I’m
finding opportunities, and money & position management examples. Email me if you need the
(free) link (or
click here).Â
Best of luck with your trading on
Thursday!
Dave Landry
P.S. Reminder: Protective stops on every trade!
P.P.S. Learn my newest and most advanced version of my Bow
Ties Strategy. Click
here for details.