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S+P 500 'I See Your Stops'.

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S+P continues it's surge upward in spite of, or because of, retail traders being 90% short?

Nice inferred correlation between 95% of traders failing and 95% traders trying to pick tops and bottoms by Assad Tannous.

 

 



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That's true , also true of traders trying to hit turns into retrace waves.  Hitting turns out of retrace is easier as Fib levels are so often involved.  Nevertheless the lesson is the same, the trick is to identify the turn sufficiently quickly after it happens to get in on the next pull back or the next after that confident that you are trading with the momentum.

 

Therefore thinking and analysing to predict the top is still a good thing to do but actually calling it and trading that top is a very dubious activity as you say.

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Yes, that's true , it is far easier to identify the end of a pullback than the top of a market. If you look at any trend there are many highs that could have been a top only to be superseded by a new one but only one will be the real top therefore picking tops must be a low probability trade. As for pullback levels and more importantly their failure level for price to continue with trend trading on a shorter time frame I find recent price action to be more valuable than levels based on historic data. This is why a sloping 20 ema works so well on intraday charts. The 20 ema is closely related to the 50 RSI level and a pullback that fails on a bounce off either=both makes for a strong entry signal to enter with trend. 

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Tru Dat! 

 

Survival long enough to learn how to lose is the key for me.  My mantra is lose small and fast, win big and slow.

 

Regarding top identification, actually any turn identification, I am a big believer in looking at multiple markets for correlation.  This was also a point made in that video interview of Anthony Crudele you posted (if anyone hasn't watched it you really should!).

 

Regarding stocks, we have the interesting possibility that other markets except US large Caps are in retrace (obviously they could also eventually make new all time highs but for now look like they are in retrace).  So if we see proof of retrace turns in say FTSE 100 and DAX and Nikkei at a point when US large Caps look like topping out then maybe that will be the top.  As always has to be confirmed by price action thereafter but I mention it because we are coming up to a possible retrace level on FTSE 100 at 6740-80 resistance zone.  One to watch closely.

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I personally use the market insights as a counter intuitive indicator, so taking into account 95% of spread betters get it wrong it would seem to be logical to take the opposing view. Still get it wrong though, would be nice to know how many of the A and B book clients are on each side of the market but that data would never get shared.

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