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When the markets are hitting all time highs and indicators like the RSI and ADX (my 2 favorite) are climbing higher and higher each day, the likelihood of a pullback is low as it takes some time for the momentum to slow down. However when markets continue to move higher and you start to see multiple divergence on indexes, indicators, and sectors…the likelihood that a market is going to fall increases each and every day the market defies gravity.
I have a feeling that whichever way the market starts out it’s post vacation move, will be a head fake. If you’re trading has been going extremely well…remember to give the markets their proper credit for some of your percentage gains, because just about everything has been going up.
“Experiments show that a lucky even can lead to overconfidence”
~Didier Sornette “Why Stock Markets Crash”
“The object of reading the tape is to ascertain, first, how and, next, when to trade–that is, whether it is wiser to buy than to sell.” ~Livermore
