It’s called distribution, aka a H&S top. If there is one pattern in the world one should learn to recognize on all timeframes it is it. Sometimes it resolves itself to the upside, but more often than not to the down side. The point is, when it does present itself, our job is to be put all of your opinions, biases, analyst recommendations, yahoo finance articles to the side and only listen to what the market is telling you. When you see this pattern, it is telling you to get away, and stay away until the pattern resolves itself.
The market does not care what you or I think a stock will be worth, how many iphone 8s the company will sell in 2019, when you see this pattern, the market is telling us that everything we think we know, everything they are telling you on CNBC, is wrong. Very wrong, and without a major catalyst, like iphones just cured cancer, it will very likey resolve itself to the downside. For the one time we are wrong and step aside, we will be right 9.
One of the few things many “investors” fail to understand, is there is a time to be in and a time to be on the sidelines. Learning to recognize this is critical if you want to outperform over the long run. Your timing will probably never be perfect, but it doesn’t have to be. Better to recognize and be safe than be holding the bag.
Below are a list of stocks first that showed distribution in the past, and how they panned out. Followed by a few that are showing these signs now. If this helps one of you readers in your future, I have done my job as an online mentor.
Loved by the beloved Jim Cramer, he was so embarrased by his failure to recognize simple price action, that he had to publicly applogize.
SXC – This is now a $3 stock and it started with distribution.
HZNP – Stocktwitted a short call on this one on 9/19 or 9/20.
Here are some stocks today, that look awfully similar.
Oh, almost forgot