A significant feature of the last phase of a bull market cycle is often the lack of a decent correction which keeps everyone "in" capturing capital gain and are happily believing this uptrend will last a lot longer time yet ..In this last phase when correction indicators go off they "cry wolf" and investors eventually lose belief,criticise, and then ignore...When optimism reigns supreme and nearly everyone ignore warning signs, the cyclic top is near...(DOW Theory)
I made this chart this morning for a bloke who was interested in Bollinger Bands..I didn't intend to post it on ST as the market is in this "cry wolf" (Moose roaring season) phase...... but since everyone is posting pretty pictures, I thought "what the hell"...here is mine for what it's worth.
The predicament this person had was figuring out which way the trend would go after the Bollinger Band squeeze..adding some TA indicators helps solve the puzzle so the chart below is self explanatory....and odds favour it to be bleak this time.
...but looking back all these other corrections on the chart, TA is starting to look more like a "Drama Queen" with these "cried wolf" warnings as the corrections are followed by numerous higher highs reducing investors fear and starts breeding "buy in the dip" investors who actually cause these corrections to become shallower and shallower as their numbers grow...
However investors who use TA for buy/sell timing of shares should stay loyal to the discipline it's prudent to lay low during the warning periods...and treat the minimal opportunity cost of doing so as an insurance policy ...There will a time when topping up in a dip will prove an expensive lesson about downtrend/reversal risk
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