SPDR S&P 500 (SPY)

[learningboutinv]

Would You Buy The Breakout?
Consider this chart: If it was an index or an individual stock, would you buy it?





I know I would.

The chart, courtesy of Charles Kirk, poses an interesting trick question: Its actually an inverted chart of the Dow over the past year. It is presented upside down, so last week's market break and turmoil shows up as a breakout -- not a breakdown. In the original Dow chart (invert the one above), it is an obvious breakdown.

The psychological question Charles poses is this: If you would buy the inverted chart, then wouldn't you most certainly sell the inverted version (if not outright short it)?

Its a very clever way to check your own biases. The dip buyers today are somewhat equivalent to the sellers of the above breakout.