I've never heard of that 3% rule on a breakout. A breakout is a breakout, volume is an important element on the break.
There has been some talk about waiting for a 3% continuation of the move after the breakout for confirmation. However, the same publications that describe that rule also note that using 3% as a traditional rule will more than cause a lot of consternation for traders, and thus not be very effective at all. See below for a description by Chartfilter.com Breakout Validity "Not every move out of the price pattern constitutes a valid signal of a trend reversal, or resumption if the price is in a narrow trading range. It's helpful to establish valid criteria to minimize the possibility of misinterpreting moves such as whipsaws. A wait for a 3 percent penetration of the boundaries is traditionally necessary before determining that the breakout is valid. The resulting signals are less timely, but a considerable number of misleading moves are removed. However, many short-term price movements barely exceed 3 percent in total. In short term trades it will be difficult to make a profit if you wait for a 3 percent move to buy, and an additional 3 percent decline for a breakdown to sell. The 3 percent rate works well for longer-term price movements where the fluctuations are much greater. Deciding whether a breakout is valid or not depends on the type of trend being monitored, volume, momentum characteristics and your own experience. An upward surge in trading activity, or volume, confirms the validity of the breakout. A low volume breakout is suspicious and should be disregarded. Increasing volume is not as essential for a valid signal with downside breakouts, as it is for an upside breakout. Prices will often reverse and put on a small recovery, following the downside breakout. This price increase is regularly accompanied by declining volume." http://www.chartfilter.com/reports/c32b1.htm
I see divergences everywhere, I made this mistake in the past and will not make it again, their is money to be made, just make it today, and worry about tomorrow, well tomorrow.
GE earnings tomorrow should move the market again, todays move is incredible. Seems everyone is calling for 14k, reminds me of the last drop in the market when everyone was calling for the dow to drop below 10k, never happened. Will 14k happen, Im putting a 99% chance that it will. 14k by next week, maybe as early as tomorrow.
I don't need logic. All I need to do is point to the last year and say, "See?" This market is anything but logical. The market continues to do what it wants regardless of how many postings there are about cliffs. Regardless of how many pundits call for a correction. Regardless of how many indices are diverging. Regardless of.... Well, you get it, I'm sure.
Yup, it looks like its on a mission : subprime Inflation poss rate rise nothing is going to stand in its way. ES has been smooth today wheras the AB has been a b1tch. hold on - looks like a short setup on the AB 5 min chart
That is the whole truth. The market is going to do what it wants regardless of what folks believe it should do. The best thing to do is to hop aboard the train or stand aside. I have opted to stand aside at this level - it's pure madness. But one thing you won't see is me calling for a top or trying to get in the way. I'll just be road kill like everyone else calling for it.
So far the market has fit into logic perfectly. The retreat in 2000 was predictable, the bottom in 2002-2003 was just as predictable and then the fact that we would make it to the other side of the right peak on the SPX was just as predictable. If you look at the SPX, every move has been very predictable and very logical. The market doesnt do what it wants, but there is a larger picture. The SPX still hasnt set a new high since June 4th. I feel the SPX will be pulling back in the future as value is cast aside and the NDX will move higher. SPX 1130, NDX 3000.
Ok, then if the market is not doing what it wants, what is it doing? Is it following some puppet master? Secondly, if today's move is logical, then what are you doing all this time calling for it to fall off a cliff, and then telling me I'm not using logic when I say it's going to continue? Are you calling for a top here? If not, when? Clarify yourself a bit, because when I read the second post of this thread - the one that started our discussion - it sure sounded like you were looking for the market to "fall off a cliff". Wait, that's exactly what you said!