let’s talk about charts and technical analysis for a minute so we can see where STHG is going to go so we can all understand it better. Read all of this hopefully it will make sense to you. So WHAT MOVES THE MARKETS? Making money in the markets using technical analysis is deceptively difficult. We are attempting to find clues that will indicate where the market is going in the future so we can get in now and ride it to the expected destination in the future. To develop a strategy that will help us determine where the market will be in the future, we need to first ask: “What moves the markets?”
The answer is simple: People move the market — LOTS of people!
The movement of the market is the movement of mass psychology of the people. So the “nature” of the markets is HUMAN NATURE! Therefore: Technical Analysis is the Math of Mass Psychology. I know STHG is going to bounce hard because there are a ton of people waiting and watching to jump in. And when they do, its going to be fun. Not to mention there are sooo many other positive factors with STHG.
Anyways charts are maps of collective human behavior (not to be confused with collective human thought) It is almost like a Rorschach inkblot test where the subject projects his or her personality into the inkblot. The inkblots/charts are ambiguous, structure-less entities, which are to be given a clear structure by the interpreter. This is often how technical analysis functions with the masses. To say the markets are LIKE people is inaccurate. Markets ARE people. Charts don’t merely map people’s thoughts, beliefs, hopes or fears. They are the most honest reflection of human beings because they map our actual behavior. Nothing gets plotted on a chart because someone thinks something, holds an opinion, or has a fear. Lines, dots and bars are only plotted when action is taken and people put their money down.
The market as a living, breathing human entity is not an analogy. It is a fact. But let’s look at an analogy to help us as we begin to look at how we can take a chart that looks like a Rorschach inkblot test and turn it into something more objective that will help us develop probabilities of future movement. Ok so Imagine sitting at home in front of your television watching a bus driving down the city streets. The bus is packed with people (the masses) yelling at the driver trying to tell him which way to go next. Your job is to predict where the bus is going and type your predictions into a computer a block before the bus gets there.
Not an easy task!
Is it an impossible task? Almost! But there are some things that could make it easier. Some events could put the odds on your side … even if just for a moment.
If the bus is speeding down the street at 65 miles per hour, the odds are against it being able to stop on a dime in the next block. Yes, again it’s possible, but not without needing new tires after the abrupt halt. It’s pretty safe to say that it would be an exception to the rule and not the driver’s intention to stop that soon.
Another scenario could be if the driver was stopped at a traffic light in the right lane and has his right turn signal blinking. This would be a reasonable indicator that the bus is about to turn right, so you could type into your computer that the bus will turn right here and go at least to the next cross street.
Of course the bus driver could just go straight anyway (we’ve all been behind some drivers who have had their turn signals on for blocks without turning), but the odds are with you that when a person activates their turn signal they will probably turn in the direction of that signal.
Finally, if the driver is crossing an intersection and you can see up ahead that the traffic light at the next intersection is yellow and about to turn red. You could type into your computer that the bus will stop at the next light. Will you be correct? The driver could speed right though the red light without stopping, and that does happen occasionally. But the odds are with you that the bus will stop at the next light. Even a police car with siren blaring will slow down at red lights.
The most reliable “signals” in the market are these exact same ones.
We look for “speeding” when the market is moving so fast that the sheer momentum would make it difficult for the market to do anything but keep going to give us TREND and DIRECTION.
We look for “turn signals” which have proven in the past to give us TRIGGERS for the market changing direction.
We look for “red lights” where the market will most likely stop or at least pause to provide ENTRY and EXIT levels (support and resistance).
These are the 3 ENERGIES are:
1. TREND (primary direction or destination)
2. CYCLES (temporary turning points)
3. SUPPORT/RESISTANCE (traffic lights)
What we must avoid is trying to guess if that bus is going to turn or stop when there are no turn signals, no stoplights, and it is just cruising along slowly. That is a time when it could do anything. The key to success is to be patient and wait until there are clear, high-probability situations before we make any commitments.
The fact that the bus driver and the mass of people trying to influence him are all humans as I am, doesn’t really give me much advantage in somehow knowing what that collective group of people like me will do block by city block. Likewise, it is nearly impossible to predict how the masses will influence the direction of the market.
Common levels of Support/Resistance are:
15 EMA
50 SMA
100 SMA
200 SMA
Previous Cycle High/Low
Floor Trader Pivots
Fibonacci Levels
Of the 3 energies I mentioned above, the most important is the trend.
The reason for this is found in the very essence of the market itself — it is the result of the behavior of the masses.
Even though you are one of the masses simply because you, by nature, have the same thought habits as most people, there is encouraging news:
There are times when the masses do make money! And that time is coming with STHG!
Lets go STHG LETS GO!!
PEACE
AI
