The Anointed Ones and The Bearish Divergence

I'm sure most of you have seen these anointed ones all over social media and stock market groups. The funny thing about these guys is how much they love to be right...

... even when the market tells them otherwise.

So let me first enlighten you to a very powerful prophetic indicator that only a few mortal men use. 

The Bearish Divergence

A bearish divergence appears when the price makes a higher high but the RSI forms a lower high. Simple right? If you want it in more simpler terms, it could be that most people are bullish on a stock but the price isn't going anywhere and suddenly one day, decides to drop - which confirms the divergence. 

Now let me take you to another session of appreciating renaissance art while understanding sentiment cycles. Let's begin!

When a monster rally starts on a stock, people obviously take notice. Anointed ones would then claim how beautiful this company is based on their market experience. So they urge the new bloods to read on the company.

Obviously this would lead into a lot of discussion. Some would try to refute and warn but ultimately drown as things turn when gurus would then claim victory over favorable price actions amplified by the voices of their cult following.

At some point, many would profit from the run. And some would usually share how lovely their experiences were and how glad they listened. Their "work" would then be used as gospel to the unbelievers.

"See? Bagger na kami! (Actually not yet for me, but) Be quiet and just sit tight!" 

But of course not everyone would profit. And when things turn a little sour and a few start to doubt, the anointed ones and their cult would then start speeches that contradict and confuse - ultimately to have the follower confident of his or her position... to be confidently confused.

We all know where this is headed right? But not a lot would accept the market's truth. 

When you see this statement, it really means "I don't know what this statement means but I'll say it anyway so I'll look smart."

This vicious cycle is very prevalent when you see anointed ones here and there hype the certain stock non stop even during consolidations and obvious price dumps.

When a bearish divergence confirms and materializes the bear, that's when things get nasty. So if I were you, I'd be taking what I have even if it is at a loss and don't look back.

Click here to read a previous similar post.

Stories of A High Risk Trader : Gurus and Bagger Plays

It's May and everything is red. You check your port and it ain't pretty. You hold your beloved bagger turned beggar stocks and start reading up on disclosures, follow gurus, trace broker transactions and start to wonder what you did wrong. "It was quite easy to make money last month. What in the world happened?"

What indeed.

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Let me tell you a story in the eyes of ZF. It all started 1st quarter of the year. A Facebook post appeared, heck, probably a private message coming from a popular guru or stock market icon.

Tiwala lang. (Just trust) 

Of course, you're taken aback. You've never gained access to such vital information. It's too good to be true right? Stories and rumors of the many who have lost in the stock market flash between your eyes. "But what if it's true?" You mumble to yourself. 

What if. 

The man who claims to be an informed player seems decent. This is your golden chance to regain all your losses! And in a moment's notice, you succumb to the temptation of pushing that buy button. 

All in!

You consult with a few people if you did the right thing. It seems many have already bought as well. You join in the exchange of information and pleasing comments about the company. Big personalities add to your confidence as they release sweet words about this trade. You even spot a few who claim to be the Painters of the Tape, the chosen ones who are tasked to bring the prices to nirvana. 

"Marami kang binili anooo?" one asks. And you casually reply "Hindeeee. Tikim lang." 

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A few weeks later you check your port and you are up BIG! You can't believe your eyes. The rumors were true! The tip was legit and everyone is greeting each other and singing praises. As a reward, you buy yourself that lovely meal and start counting how much profits you need to buy that lovely ride you've always dreamed about.

First Gen Porsche baby.

Just a few more weeks and it will be yours. But you can't wait that long so you decide to leverage on more positions bigger than your original investment because YOLO right? What could possibly go wrong?

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And now those weeks have come. You excitingly open your trading account only to find out the dreaded mess it has become.

"Anyare?" You were supposed to get your Porsche this week, like everyone else. You consult your trading buddies first. They too are in the same position. The "Alliance" and the gurus are telling you that it's just a minor bump in the road, so stay put. "Only ginyuses will sell at this point" they add.

Desperate and in need of comfort, you seek out the root of it all. The annointed one. The keeper of truths. The Painter of the Tape.

But even he has no encouraging words to give.

What is it that you should do? Will you continue to believe these people? Will you continue to hold your positions? Will you sell? Will you grab life by the balls and change your destiny? 

I have no idea. I'm just a mere fiction story teller.

PS. Click here to read on a similar post.