Taming the Bear. Tate Christopher

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СКАЧАТЬ in the market is beginning to change.

      Some astute traders will have seen this change in tone and will begin to sell. Prices are now in an uneasy equilibrium between bullish and bearish. This unease is beginning to filter into the mood of market participants, since prices are beginning to slip against positive expectations. The successful group – who have ridden BHP up – are now in danger. Despite this, they will cling to their positive expectations, even in the face of mounting evidence against them.

The Retest

      This phase is the last attempt by the bulls, who had been very successful, to reassert themselves, and momentarily their beliefs are confirmed, as the stock rallies. Their fear of missing out on potential gains is somewhat assuaged. This is a classic bear trap, and it constantly catches the unwary. It is at this point that technical indicators will contradict the move up. Astute traders with a good trading method will now be getting extremely powerful sell signals. Sentiment has swung the way of the bear. The bears are about to become the successful group, and the bulls are about to feel the pain of unrealised expectations. Fear starts to raise its head among the bulls, as expectations diverge from reality. Traders have gone from expectations of a never-ending series of highs to the unpalatable truth that prices may actually decline. The interesting point to note is that this fear does not translate into action, as we will see in a later chart. Fear among market participants is initially manifested as paralysis, as they face mounting evidence that their opinion is wrong.

The Confirmation of the New Trend

      Crowd sentiment changes at this point. The downward spikes in price shake more of the bulls from their positions, and they join the bears. The crowd now starts to look for justification of its opinion in the underlying fundamentals of price. Note that price comes before fundamentals. Fundamentals serve merely to reinforce existing feelings about a move.

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