Lots of Stop Runs

What do they do before they make a move higher? They take your shares on the cheap. "Head fake" is a general term encompassing a lot of different tactics including false breakouts, false break down, stop runs, limit triggers, etc, just about anything that "looks" one way according to price (and this is why I say, "Above all else, price is deceptive").

Right now I'm seeing a lot of stop runs, it's not just so they can say, "All of your shares are belong to us HAHAHA!!!", it's because 1) it's the easiest way for them to accumulate quickly without raising any suspicions because for some unknown reason, whenever there's a big stop run like that, traders just assume their shares just disappeared, NO! There's always someone on the other side of that trade and when you get big volume on a 1 cent stop run, someone just took on a lot of shares cheap. 2) It's a momentum thing, shorts enter, longs who were stopped out go short (that's one of the most brain-dead concepts of Technical Analysis) and when the former support area (where traders always put there stops at as predictable as the sun rising tomorrow morning) which is now resistance is broken, you get a massive short squeeze and who ever took the other side of the trade is making nice money on cheap shares and finally 3) in large size.

I'm seeing a lot of stop runs, it's making me think that scenario 3 or the last scenario ("W" bottom) is high probability.


Time to think like a crook.


Take a look at XLF and tell me, of you could (and they can) move this a little, where would you take it.

Look at all the volume earlier today, that's like 4 or 5 days of normal accumulation all at once, EASY!

The support area to the left on the upper trendline is $20.11, guess what the intraday low was in XLF and look at volume the rest of the day before you answer after the initial gap down stops were run?

The answer is $20.11, the stops would be placed "ON A BREAK OF $20.11" or below support, all day today $20.11 was support so those stops were never hit, at least....NOT YET!

There's one more zone that is within reach, the second trendline below the first, that's a gap and the stops would be somewhere around $19.96. Notice anything else, give you a hint, it's psychological?

That would be one of the most obvious stop levels of all, $20 even.

I see some interesting things, still totally in line with the Yen trade, the 3C charts, basically the idea of "This isn't that much of an impressive set up for a big move higher", but in looking at HYG's 3C chart, I think it's just as if not more probable than when I first expected something from it last Friday.

The PMS are in play, someone sent me FFIV which looks like there's no way from a daily chart, but that all happened early in the day and it's been lateral the rest of the day, so there are a lot of assets that have either run the stops already or like XLF, are a penny from it.

I think we get the move, I think I'm setting alerts for stocks like XLF under the stop levels of $20.11, $20 and $19.96. Of course I'll double and triple check 3C and the correlations, but this is now becoming a cleaner, less risky set up, I'm glad I didn't do much today other than clean up some shorts/puts.

I think tomorrow there will be lot of game to hunt, again if you'er nimble, otherwise I'd just wait a bit more and let the market do what it will do and use that to your advantage on core positions.

More to come, but as I looked through the watchlist before the close, almost every asset had an area that I'd set an alert at an be very interested in buying on a head fake / stop run move.