Three of the most speculative Nasdaq stocks put in reversal bars this week. If the most speculative names fall, the rest will too.
The reversal in BIDU is about as powerful as it gets. Note the strong negative divergence in the weekly RSI.
Ditto for NFLX.
Here we are, finally, after a long and difficult summer at the end of a historic September rally about to find out who is going to be right. Will it be Robert Prechter and the P3 crowd? Will I and a few others that are pointing to a cyclical bull market correction to be followed by another leg up next year be right? Or will all of the bears be proven wrong as the market breaks out to rally highs into the end of the year? The last question will be answered in just a few weeks. The first two may take several months. But it is interesting to note that one long time bear is throwing in the towel according to Marketwatch: Peter Eliades. Such a public admission right at the top of the rally supports the bearish case, which is unfortunate for Mr. Eliades. October is setting up to be as memorable as September - just not what most are expecting.
But the most important point is that being right is not what trading is about. Trading is about making money by following a systematic plan with discipline. Sometimes it helps to have a heads up on what the market is likely to do, but the trading plan should not depend on it.