Is there anyway to identify basing rather than a trap? I would assume that this more depends on what's going on under the hood, in relation to number lines and related asset classes. Thanks.
I just believe in principle that the easy trade is almost ALWAYS the wrong trade. So when markets are "overbought" it's easy to sell them and vice versa when they are "oversold". Basing patterns are easy traps because you get the bus people saying "it's can't break through". LOL. But yeah the number lines help. I think the best way to decipher is look at underlying stocks. I see a lot of fresh breakouts. I think the likely outcome is more chop though as the number lines have returned to choppy mode. So any spikes up will probably get faded and any sharp drop after the Fed will probably get bought, but the stocks that broke out will keep going up and up and up...
A lot of people are pulling their hair out. Bond shorts, Gold shorts, ES shorts, Bill Ackman. LOL. Even Natty is up 20% off the lows, although got a buy signal on the widowmaker last week. No wonder Goldman is slashing trading staff. This has been a brutal 2016 for most hedge funds and banks.
Hell, throw the Coal shorts in there too. Why is this up 60% this year with natty close to zero? I haven't heard a peep in the debates about giving any handouts to the coal producers. I thought they had one foot in the grave.