Page 148 - THE MARKET WHISPERER

146 PART 5 - Principles O f Technical Analysis

In other words, we would not short at [1] because at the start of the day,
the stock was running up and therefore the probability is high that the
downward reversal would be relatively short compared to the next upward
reversal (with the trend) immediately following [1] and before [2].

In fact, the example I chose is a dreadful sampling of a stock that
traded most of the day without a trend. If you try to make a profit from the
outcomes of these reversals on a day like that, you are destined to failure!
In short, don’t let me catch you trying to make “fast money.” Believe me,
I was there, I tried it, I lost enough until I eventually learned that I must
never get involved in a trendless stock.

Success requires that you identify the outcomes of reversal patterns in
stocks with a clear trend. One good yield from a stock with a clear up or
down trend may be enough to provide your daily profits.
Intraday Pattern Reversal for Sears, SHLD

On the day that AAPL went nowhere, Sears began its first hour of trade
with a clear upward trend. The day actually began with two dark candles,
but experienced traders know that during the first ten minutes of trade
(the first two candles), a stock’s trend is still undetermined and derives
chiefly from automated orders given by the public to brokers before the
day’s trading begins. When the third candle rises higher than the high of