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.

Advertisements

Tags: , ,

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s


%d bloggers like this: