Courtesy of Read the Ticker.
Energy builds up in a 'Wyckoff Cause', like a weight building building up on one end of the see saw, then the balance moves and we have the resulting swing and effect.
Wyckoff: The Law of Cause and Effect
In order for there to be an effect (change in price), there needs to be a cause. The effect will be in direct proportion to that cause. Best price moves occur when there has been enough time to allow for a period of accumulation or distribution (or in other words a cause).
If the trend does break down a 30% plus move down is very likely. The NYSE is very Wyckoff friendly with the law of cause and effect.
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Investing Quotes:
"I believe that uncontrolled basic emotions are the true and deadly enemy of the speculator. That hope, fear, and greed is always present, these emotions sit on the edge of the psyche, waiting on the sidelines, waiting to jump into the action."
Jesse Livermore
“Bull markets are born on pessimism, grow on scepticism, mature on optimism and die of euphoria.”
John Templeton
"Stock market bubbles don't grow out of thin air. They have a solid basis in reality, but reality as distorted by a misconception"
George Soros
“People somehow think you must buy at the bottom and sell at the top to be successful in the market. That’s nonsense! The idea is to buy when the probability is greatest that the market is going to advance.”
Martin Zweig (The inspiration behind a number of Martin Zweig’s methods came, from Jesse Livermore).
My experience has been that in successful businesses and fund management companies, which performed well over the long-term, some courageous decisions were taken. Courageous fund managers reduce their positions when markets become frothy and accumulate equities when economic and social conditions are dire. They avoid the most popular sectors, which are therefore over-valued, and invest in neglected sectors because being neglected by investors they are by definition inexpensive. The point is that it is very hard and that it takes a lot of courage for a fund manager to avoid the most popular sectors and stocks and to invest in unloved assets. Finally, every investor understands the principle ‘buy low and sell high’, but when prices are low nobody wants to buy.
Marc Faber
