Thursday, July 22, 2010

Sorry to Spam you

The only thing I can see, because by the charts, this market looks like dead man walking, is that they may be gunning for the orders at $110.

$110 is a nice round number, the human mind gravitates toward whole numbers like this, there's resistance in the area that is recent and the way the market's work would point to a logical, short fishing expedition above $110, it doesn't need to be long, just long enough to trigger those orders.

Why would they do this? If what I'm seeing is correct and I have no reason to believe it is not, then they are in distribution/short selling mode. If they can hit $110, there will be a bunch of shorts covering, that means buying and volume and the market makers are paid in part on the spread, the more volume, the more they make so trigger those orders and you make money. Then in addition, the long bulls will come rushing in on their limit orders, then they drop the market back below $110 and all the longs are at a loss; it's called a false breakout. The further down the market goes, the more of a loss the longs are at. So the longs start selling and that adds fuel to the fire, theirs more supply then demand and the market continues to snowball down. False breakouts happen quickly, the fall fast and hard so watch for this to happen, if you see it you may want to try to ride the fall for a quick trade.

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