The Stock Markets Tumble
Did you see it coming?
I would like to ask any reader if your intuition predicted either of the following; the sharp drop in the major indexes, the sharp rise in the US Dollar, or the sharp rise in the Japanese Yen (unwinding of carry trades)?
Intuition is our most powerful sense, it enables us to read someone’s energy frequency (good mood/bad mood), before they even walk through the door. It also gives us the ability to assess and analyze a situation at a sub-conscious level before other factors become involved.
For example; if you subject yourself to regular repetitive patterns over a long period of time your sub-conscious learns to spot these patterns before anything else, such as your other 5 senses like seeing and hearing. Unfortunately, what may also happen is that we can override this intuitive analysis by allowing these other senses to become too involved. An example of this is your intuition tells you we’re due for a market correction but market commentators say the opposite, and by default your conscious will take over and rationalize that your intuition is wrong and the market commentators are right.
I would like to explain that my intuition too told me that there was blood in the air. My intuitive sense was reading it from several sources, but it was associating it with repetitive behaviours that have become ingrained in my sub-conscious. Some of that sense came from a technical stand-point, some from a fundamental, and some from the psychology of the markets. However primarily it came from understanding one thing and that is buyer/seller exhaustion.
As much as we want something to go straight up, we all know it just doesn’t happen. Markets become stretched, markets become overbought and oversold, in other words, they exhaust at extremes and this is exactly what has happened with the major markets, the US dollar and the Japanese Yen (although in the case of the two currencies it was an exhaustion of sellers not buyers). More evidence of this is that the same news that was being pounded by Wall street a couple of months ago is the same news being used to explain the drop in the majors. Surely we can all see the flaw in this thinking. While the DOW heads up, everyone ignores the bad news, but as soon as she drops, the news becomes the cause. Sorry, but this is not the case.
I am not saying that the markets are in for a crash, I am not saying that the fundamental back drop of the markets is not turning either, but what I am saying is that intuitively, I could see the sell off coming (and the spike in the USD, and the JPY), and this is thanks to subjecting myself repeatedly to learning what makes the markets move the way they do (i.e. buyer/seller exhaustion), and trusting that instinct.
Here is a video I have compiled for viewing:
http://www.youtube.com/watch?v=SzlELetE8ic
Dean Whittingham
Elite Insiders Group - Trading Systems
Financial Market Fisherman © 2004 - 2007
