One other thing, I hadn’t intended posting about this but FE has mentioned the hard work that BB has done recently and urged me to post, so maybe you guys can do something with it.
Some years ago I was studying the FTSE. I had noticed that the early morning BBC news report would often state “FTSE falls on Gulf war fears” or “FTSE down 50 points on global downturn worries” and so on.
Then around lunch time I would check the ftse and it would be up! - this happened so often that I decided to investigate.
I soon found a pattern, it was always very visible on a line or bar chart (lol candlesticks were only used in powercuts back then). I called the pattern the “V”, always happened in the morning. I spent the best part of a year trying to map that “V”, I wanted to tie it down to a time and day of week.
I failed on that mission. The days and time seemed random, the only level of predictability was that if the index was at recent highs the “V” was more common and pronounced.
I tried for an explanation, a reason. I had many ideas including the possibility of Asian traders’ actions and so on. Eventually I just learned to wait until it formed if I was going long and that was that.
FE was following the index more recently so I told him to look out for the “V”, he saw it’s formation in action, especially in the recent run up, I hadn’t been following the FTSE for a few years so I wasn’t sure if it was still happening.
Finally, Larry Williams describes the theory of the “V” when he describes the reasoning behind ProGo as described in BB’s post.
There’s just one little piece he left out, when an index or a currency cross is making new highs many traders look to fade the move, if they see or hear of a reason then they will use that. The BBC news item is written by journalists to a target audience of retail, they are most often reflecting the very thing that traders used to fade the previous day’s move.
A fade is only good if you get in early, - so get your orders in at the open, if it’s bank shares, for example, then you will do that as soon as the exchange opens - after those are done and dusted then the “V” forms, or ProGo in action.
Well it’s just a theory,