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CHAPTER 9 Tape Reading95ity sells. When selling becomes exhausted, the smart money reverses and

Tham khảo tài liệu 'chapter 9 tape reading95ity sells. when selling becomes exhausted, the smart money reverses and', khoa học xã hội, kinh tế chính trị phục vụ nhu cầu học tập, nghiên cứu và làm việc hiệu quả | CHAPTER 9 Tape Reading 95 ity sells. When selling becomes exhausted the smart money reverses and goes long. The same thing can be seen on the long side where the majority feels as if it has missed out on a major market or stock move and can t stand to see it rise more without it. This brings in majority buying and euphoria until buying becomes exhausted. The minority then begins to distribute shares to the crowd buyers from positions it has accumulated at lower levels. The best example of this can be seen in the 1998-2000 move from Nasdaq 1500 to 5100 and then back down to 1600 and back up to 2300. Euphoria took the market to 5100 and capitulatory events not to the degree we saw in 1998 but still strong took the market to 1600. Then as the market consolidated during the accumulation phase near 1600 as the majority was still selling the market began to move upward discounting that the worst of the economic and business cycle was over. The minority then began to distribute shares as Nasdaq neared the 2200 level as the majority began to feel as if it was missing out on the resurgence of the bull move. THE ACCUMULATION DISTRIBUTION RELATIONSHIP This cycle of accumulation and distribution favors the minority who can read the tape of the market and participate at levels that feed off the usual ignorance of the majority. It may not be fair but it s how the game is played. Tape-reading principles allow you to watch how the minority is participating and then how to profit from when the majority creates the herd movement which signals a short-term stop to the current trend. As we defined the role of the smart money and the public in the price movement we must now learn to distinguish their action. The major difference that allows us to distinguish the action of smart money from that of the public is the character of price movement and volume changes. As a rule smart money action can be seen as a slow gradual price movement with steady or slowly increasing volume. The public