Good Friday!
POTC was not impressed with AMZN's earnings, yet it is market mechanics you must respect/understand in the short run (courtesy of the masses in the media). We believe AMZN was shorted more into this report due to the talking heads on Dylan Ratigan's Fast Money program, who by consensus agreed AMZN would fall after earnings. Although they all confessed to their Amazonian mistake, the pain caused to short accounts ahead of the weekend is not dissipating. The CNBC effect is real, so let us explain how to profit from it...
The fact CNBC is the dominant place most flock to creates the "it can be your best friend or worst enemy" type scenario. IF you continue to trade on their recommendations, your losses will be exacerbated. The increased one-sided volume causes greater stress (especially post earnings release). IF you're part of the trusting greenhorn herd, trouble lurks.
POTC urges forward thinkers to use more reverse psychology when listening to cable tv talking heads. Newton's Third Law of Motion states, "for every action there is an equal and opposite reaction", so IF you continue to act on popular advice, you will lose more money than the ones who fade the initial moves and establish positions in the opposite direction. The CNBC effect should be well understood and taken advantage of; forward thinkers must learn to profit from it.
In AMZN's case today, Fast Money's influence is contributing to the short covering rally (in the face of a down market mind you!). We believe maximum pain could set in soon, perhaps by Monday or Tuesday morning, so please be patient until the entire herd is thinned out in the $62+ range.
POTC urges forward thinkers to use more reverse psychology when listening to cable tv talking heads. Newton's Third Law of Motion states, "for every action there is an equal and opposite reaction", so IF you continue to act on popular advice, you will lose more money than the ones who fade the initial moves and establish positions in the opposite direction. The CNBC effect should be well understood and taken advantage of; forward thinkers must learn to profit from it.
In AMZN's case today, Fast Money's influence is contributing to the short covering rally (in the face of a down market mind you!). We believe maximum pain could set in soon, perhaps by Monday or Tuesday morning, so please be patient until the entire herd is thinned out in the $62+ range. 
IF AMZN doesn't offer us the opportunity to short/buy puts above $62, we'll be happy to wait and locate a new spring to quench our polydipsia for profits.
Patience is one of the most important arrows you should have in your trading quiver. Patience eventually leads to better timing, and timing is something most never grasp. Part of POTC’s fifth Commandment of Trading states "never force trades," since forcing trades is an impatient behavior that rarely results in a good nights sleep.
The Psychology of the Call team hopes this reverse psychology email was of interest and somewhat educational. Although we watch CNBC and respect some of its talking heads a great deal, the 11 Commandments remind us of the critical roles both science and art play in making money.
We wish you and yours another healthy & wealthy weekend. With humility we ask you to help spread the blog address to any person you feel would be interested in our efforts. Let CNBC's talking heads be your pawns, you remain King! Now for some music relief courtesy of youtube:
http://www.youtube.com/watch?v=E924bkJB23A&feature=related
1 comment:
Very good avice, very hard to practice. I agree that most have no patience.
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