Bear Flags Are Everywhere. The Santa Rally Is Doomed.I’m going through my watch list this morning and I’m removing a lot of stocks from it that have formed bear flags after the selloff on Dec 18th.
If you’re a dip buyer maybe you like pullbacks. But if you’re a technical trader you can quickly spot the bear flag on this chart.
See that high volume distribution day followed by lower volume as the price trickles back up? I’d steer clear of this stock for the moment, because that’s classic bear flag behavior.
This stock, and many that look just like it, want to go lower.
Some of these look like they are about to recover. Let’s have a look at BTDR. It’s threatening to take out the previous high, and it might. But don’t jump at it too soon. Until it starts a proper uptrend it’s at high risk to break back down and take out previous lows.
Don’t be fooled into putting your cash into the market just because the Santa Rally is supposed to be coming. Odds are good that it’s not, or that only the strongest stocks and sectors will rally.
Until a stock proves itself a winner, by taking out previous highs, or proves itself a loser, by taking out the distribution day lows, steer clear and look elsewhere to invest your money.
