“There is time to go long, time to go short and time to go fishing” -Jesse Livermore
"What happens after a fast, high-volume 2-3-day sell off. There are three major scenarios:
- a stock move sideways on a low volume as it finally find bidders. Some will interpret this price action as the forming of bear flag. Others will look at it as the forming of a new base, which is an important prerequisite for higher prices in the future as it is likely to attract fresh money. Both groups could be right and that dispute will be solved only by price – in which direction is the stock going to break out from its new range.
- a stock continues to fall down in an accelerating fashion, breaching all obvious support levels; such action often leads to a sharp V-shaped recovery at some point as shorts decide to cover and new longs enter, attracted by the new price levels;
- a stock bounces sharply from one of its rising major moving averages, as the 50-day for example. Those that are to