Page 100 - THE MARKET WHISPERER

98 PART 3 - Market Analysis Fundamentals

such analysts you will find charts with so many indices, lines, and figures
that you no longer know whether you’re looking at a graph or a map of
the constellations. Technical analysts who provide forecasts for several
months ahead are not professionals, but charlatans.

Leave the Box

The laws of technical trading are known to all trading parties. The
specialists and market makers in the New York Stock Exchange know
your stop loss order point and your entry orders points, and will often
take advantage of this information for their own benefit. Take this into
account when you’re trading. The resistance line is not a solid wall, and the
support line is not stable ground. This is why we first talk about “support
levels” and “resistance levels” rather than precise science. Young traders
in the trading room often tell me they have sold a stock because it broke
the support level, while experienced traders and I have held the stock
and in the end, profited. Don’t let your hand be too easy with the mouse.
Remember that trading is a battle of the minds and always involves two
parties: buyer and seller.

This is also why I guide my traders not to place a stop order, but to wait
for that moment when the stock reaches the stop and then exit manually.
The specialists and market makers know where most traders’ stop orders
are, and use them to their own advantage.

The Guru of All Gurus!

The world of finance is liberally peppered with gurus. Jim Rogers is one
example. He believed with all his heart that China was the next big thing,
to the point that he moved to Singapore and his little daughter learned to
speak fluent Mandarin, leaving Chinese listeners dumbfounded. And how
many gurus predicted the 2008 Sub-Prime Crash? Not long before that
collapse, I was invited to participate in a panel of economists at a well-
known university.

SMART No one can predict the future of the market or any stock. For
MONEY every opinion presented by a renowned analyst, we can find
a contradicting opinion by an even more renowned analyst.

First, the chief economist of a large bank spoke, followed by the CFO of
another bank. Both offered solid forecasts: the housing crisis is no more
than a simple passing episode, the economy is strong, there is no danger of