Checking your Biases

Would you buy this breakout?

Barry says he would and if I was looking for a good buy-in I would too.

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.

Special Thanks to the Big Picture and The Kirk Report.


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