From the desk of Tom Bruni @BruniCharting
Tuesday’s Mystery Chart is one of my favorite charts right now, so thank you all for your feedback and participation.
Almost every one of you said you were selling the stock in question as it put in a failed breakout, while a handful of you were doing nothing and buying the subsequent breakout with me.
With that as our backdrop, let’s get into it.
So the original image was an inverted daily line chart of the Invesco Shipping ETF (SEA) showing the recent failed move to new highs (lows). So everyone that was shorting that original chart was actually saying to BUY shippers, which is hilarious to me.
Click on chart to enlarge view.
I asked JC to tweet out the corrected chart of Shippers and see who was buying the failed breakdown, to see if people’s responses changed based on how it was framed.
We got a lot fewer responses than the mystery chart prompt, which may signal in and of itself that people were more hesitant to take a position on the Shippers failed breakdown than they were on the failed breakout mystery chart.
Or I could be reading too much into this, but you get the point.
What happens here with Shippers is not really my concern, I more so wanted to use this exercise to identify people’s bias right now. Are they being patient with the whipsaws and looking to buy stocks once they break out successfully? or are they pouncing on failed moves like this to capture a counter-trend move to the downside?
It seems that most of the respondents were getting aggressive on the short side and looking for further weakness in this leading stock that had broken back below its former highs. If they’re getting short that’s probably happening in an environment where they’re cautious on equities as an asset class, right?
I think that says a lot about sentiment and supports many of the things we’re seeing in polls and market-derived indicators like put-call ratios any time the market experiences a string of down days.
We talked a lot about the near-term risks and why our longer-term thesis remains that Equities around the globe resolve their consolidations to the upside in last week’s Members-Only Conference Call, which you can access for free this month!
Thanks for reading and please let us know if you have any questions!