Stock Market Logic Series #8

The natural psychological expectation is that after a stock goes up,
it will continue to shoot up and go to the moon.

But the truth is, that most of the time, the above does NOT happen immediately.

WHY?

Put yourself in the shoes of the BIG SHARK, the Puppet master...
You want to buy the stock so you increase the price to lure people to sell to you.
When you reach this point of selling, you know this is a price people are willing to sell...
So what do you do?
You stop buying and start ABSORBING all the selling from the weak hands.

Not all weak hands are the same.

Some people will want to sell at the new high or resistance.
Some people will fear and want to sell at support.

But what truly matters, is that when the BIG SHARK discovered where the ACCUMULATION zone,
he has zero motivation to mark the price up further. And before the next run-up,
he will stop force buying and start to let others sell into him (whipsaw motion).

This is the WHY, price will not move further up IMMEDIATELY.
And you will usually see a flag pattern or a triangle pattern before the next run-up.

So always remember to keep in mind, that the LONG SIDE needs a RUNWAY before takeoff.

I am talking here about being consistent and having extremely more confidence in your trading.

Once you understand the LOGIC behind the patterns, you are much more likely to trade them correctly.

It is much more bullish to wait for the RUNWAY to form than just buying a new high.
In this post, I explained the logic of why so many new highs are "fails" and do not take off...

Comment:

Comment:

LONG needs time to mature.

SHORT is fast and sharp.