Looking through some old thoughts of mine…
Posted by MC on May 12, 2008
“WWE looks like it may have based and try to pop in the near term. There is some solid resistance overhead though. I wonder what the overall market is gonna do, we may be near the base of the downtrend if we get positive confirmation tomorrow with any buyers and go on to break the channel.”
I’m learning alot by looking back at past thoughts and realizing patience is VERY important.
Here’s what we have…the blue dashed line is where I made the prior post on another site. You can see the bottom was put in as I called, but the “near term” was anything but reality. Thus my “patience” comment above. LOL
A bit after my post we had a test of the lows with macd divergence as a bullish signal. Also note this…basing under a long term MA like the 200ma here is a bullish sign often. Lots of eyes on that level and when it breaks it often goes BOOM!
In this case they gapped above the “supply zone” which is the blue boxed area and 200sma. They do this to accomplish 2 things, first this keeps those that bought in during consolidation from selling since they now are pretty well in the green and less fearful. This break away gap also keeps those not in yet from buying in at that level. The herd will buy in after it’s gone much higher, they just can’t take it anymore and think they are missing out. The laggards get in just in time for the hand off, pros take profit and the drop can begin. LOL
OH…who is “they” you might ask? That’s the big money, they run the show and they are good people to follow if you know their tricks.
Another tidbit besides the gap above “supply zones” from my arsenal…
Many focus on a 50/200ma cross. That’s great if you want to see what already happened. It’s often late if accurate at all (see the blue arrow). Try using a 21ema and a 200sma for better triggers. Why…easy, the short term is EMA because we want the most current data to be weighted and faster to fire a signal. The long term is SMA because that will reflect the more smoothed out and broad term data.
Ok and now a final note on WWE…the volume stepped in Friday as support at the 200sma/gap fill. That’s a low risk long for a bounce play right there. Gap fill backed by 200sma…double support backed by volume. 
Another post I seemed to have over looked I recapped using the link below. I picked the SPY mid term reversal 1 day before it happened. Fade the herd baby, don’t be afraid because news tells you to be. Be smart though and don’t try to catch a falling knife. 
http://www.tradersbase.com/forum/market-index-chatterbox/371-index-chatter.html#post3130
Have a good night!
MC
