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  • AvatarClarence Gilstad
    Participant
    Post count: 25

    Hi Sean

    You talked about a rare double top on the charts. What does that say about the markets and does it have a history that follows your chart readings?
    Just looking to more meaning of it.
    Thanks
    Clarence

    AvatarScott Pearcy
    Participant
    Post count: 298

    What Sean has said, and I believe it, is that it is hard to call a top, or a bottom, in the markets until well after the fact and you can actually observe it on the chart…..What Sean advises is that we should be prepared to take advantage of discounts on high quality companies when the market correction occurs by having a large cash position….Even if the market doesn’t correct, the continued growth in the market makes our positions more profitable and allows us to capture those profits in the high risk market (markets far removed from their 50-week and 200-day moving averages) while still maintaining our cash for further Logical Investor picks….

    AvatarRandall Beam
    Participant
    Post count: 51

    A double top is an extremely bearish technical reversal pattern that forms after an asset reaches a high price two consecutive times with a moderate decline between the two highs. It is confirmed once the asset’s price falls below a support level equal to the low between the two prior highs.

    Sean HymanSean Hyman
    Keymaster
    Post count: 3390

    Y’all did a great job. Not much I could add to those two explanations.

    Double tops are something that’s confirmed in hindsight and not at the time that the supposed 2nd top is being made. https://www.investopedia.com/terms/d/double-top-and-bottom.asp

    Double tops are rare because they’re a pattern of a true trend change from an uptrend to a downtrend. What’s going for the chances of it being one (which it may or may not be one) is that we’re in a historically long rally. The price of the index is far from its major moving averages. And the RSI is weaker on the most recent (2nd) up-leg than it was on the 1st up-leg of the pattern.

    Remember: Investopedia.com is our best friend as it concerns investing terms.

    AvatarClarence Gilstad
    Participant
    Post count: 25

    Thanks Guy
    Make perfect sense. Great to have such a wealth of knowledge to learn from.

    Sean HymanSean Hyman
    Keymaster
    Post count: 3390

    Thanks, Clarence. I love the teamwork on this site.

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