Would You Buy The Breakout?

Thursday, March 08, 2007 | 08:36 AM

Consider this chart:  If it was an index or an individual stock, would you buy it?


I know I would.

The chart, courtesy of Charles Kirk, poses an interesting trick question: Its actually an inverted chart of the Dow over the past year. It is presented upside down, so last week's market break and turmoil shows up as a breakout -- not a breakdown. In the original Dow chart (invert the one above), it is an obvious breakdown.

The psychological question Charles poses is this:  If you would buy the inverted chart, then wouldn't you most certainly sell the inverted version (if not outright short it)?

Its a very clever way to check your own biases. The dip buyers today are somewhat equivalent to the sellers of the above breakout.

Nicely done, Charles!

Thursday, March 08, 2007 | 08:36 AM | Permalink | Comments (31) | TrackBack (0)
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pretty undeniable there!!!

Posted by: SINGER | Mar 8, 2007 8:51:17 AM

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