Saturday, May 19, 2007


I'm going to show you the problem with drawing lines on a chart. I've often seen these trendlines used as a reason why the rally is or has topped out. As if somehow the stock market, which is just humans buying and selling stocks, are supposed to know that a line on a chart is bumping up against another line drawn on a chart and therefore they should quit buying. Trendlines get broken during bull markets. Another reason I follow the COT report. I'll look for this rally to be done when the big boys start selling not when a line on a chart touches another line.