DummySpots.com

So many times the market is an elephant and we are blind men.

This chart of NETL (Netlogic Microsystems) caught my eye the other night:

Here’s what I noticed:

• (A) Monster volume on these two days. Likely to mark some kind of bottom.

• (B) Even bigger volume on the breakout, then a couple of wimpy little pullback bars (this would be perfect if the second one were a Dummy Spot… darn).

• (C) A multi-day thrust upward followed by this sideways to downward action on declining volume. Now my ears are perked up and my gaze is fixed. Come to papa, baby, come to papa.

Now, for those who’d prefer this be drawn on the chart:

We broke the downtrend line with a nice gap up, spiked upward and have now pulled back. A whisper from the Holy Grail.

Moving averages, you say? Aren’t those Multiple Moving Averages and Rainbows and Bowties pretty? Here y’go:

The rainbow flipped and now we’ve dropped down to give it a kiss.

What’s the point of all this? There are an infinite number of ways to look at a setup and see that it’s a setup. People spend their lives looking for the Next Great Indicator to show them… a setup. Then they blindly buy and hold at the very first trigger, and over the course of a few trades, lose their money. They then damn the indicator to everlasting hell because they’ve proven “it doesn’t work.” Au contraire. “Setups is just setups.” The magic is in the execution of the trade. We’re talking precise entries, position sizing and stop management here. That’s your true Holy Grail.