Join Tom Busby and myself LIVE at 1 p.m. ET TODAY and learn how to trade one of the most explosive tickers in the market!
I wrote in my Telegram channel Monday about the value of catching the trend change versus following. I brought this up because many traders felt they missed the stellar November run.
I get it. The noise in the market clouds our brains, and traders often second guess their thought process as a result.
I’ve been there. It didn’t work out for me, either.
So I left and stopped listening to these “influencers.”
But not without backlash…
“You can’t time the market! Stop wasting time trying to find a bottom.”
I’ve been doing it anyway… for a very long time.
In fact, there are a variety of key elements I use to help me successfully go against the flow.
One element I focus on is the accumulation of assets by the so-called “smart money,” meaning big institutions and players.
When they accumulate a stock, ETF or even certain options, the market will most likely move in their anticipated direction.
When they start doing this, I want to know…
I want to know because they usually start doing this where?
At the bottom!
Didn’t they know they weren’t supposed to catch falling knives?
On Balance Volume
The problem for the everyday trader is seeing these big-money moves when they first start entering. This is because they try to hide their entries.
There are, however, a few ways to detect their moves… One of them is by using On Balance Volume.
OBV rises when volume during positive price action days exceeds volume on down-trending days. When this occurs, the asset is being accumulated and price will often move higher.
When OBV starts to decline, the reverse is true, meaning that the asset is being sold and lower prices are likely to follow.
Here’s a great, trusty old picture from StockCharts.com to show you how it works.
Notice OBV at the bottom. Don’t look at the price action at the top of the chart yet.
Notice the trend up, down, sideways and then back up again.
Next, look at the “Volume” in the middle of the chart. Don’t stay here too long. It’s enough to make you cross-eyed.
Instead, as you take your eye to the top of the chart finally to see how price actually moved, note that the red bars correspond to price action “down days” while the green bars correspond to price action “up days.”
Now take another look, this time with my blue arrows added to the chart below. Note the divergence of OBV compared to price action from Nov. 22-29. Could OBV have helped prepare you for what came next?
Compare the divergence of OBV to price action for the first week of December in the chart above. What do you think happened next?
The answer is in the chart below.
Facts are stubborn things.
Think and win!
Celeste Lindman
Celeste Lindman Trading
If you haven’t already, join my Telegram channel here for frequent trading insights and market musings!
*This is for informational and educational purposes only. There is an inherent risk in trading, so trade at your own risk.
P.S. How to Trade AAPL, AMZN, TSLA, NVDA and MORE With Just 1 Explosive Ticker
Tom Busby recently uncovered one ticker that bottles up the firepower of Apple, Amazon, Tesla, Nvidia and MORE…
All in one place.
Now, here’s where things get weird…
It seems to pay overnight!
It’s all thanks to a little known market phenomenon that takes place just before closing bell each day.
And I’ll sit down with Tom at 1 p.m. ET TODAY, Dec. 19, as he exposes how this is all possible…
