A Successful Investor Must Know When To Stop Daytrading Commodities (part 2)

Large quantities coming within a small range indicated either one of two things: (1) That considerable buying power suddenly developed at this point, and the insiders chose to check it or to take advantage of the opportunity to unload stock accumulated while daytrading commodities. “If a stock or the whole daytrading commodities market cannot be advanced, the assumption is that it will decline - a market seldom stands still.”

(2) The demonstration in Reading may have been intended to distract attention from other daytrading commodities in which large operators were unloading. (There was no special evidence of this, except in New York Central).

If the selling was not sufficient to check the upward move, the daytrading commodities market for Reading would have absorbed all that was offered and advance to a higher level, but in this case the selling was more effectual than the buying, and Reading fell back, warning the operator that the temporary leader on the bull side of the daytrading commodities market had met with defeat. At this point the operator was, therefore, on the lookout for a slump.

Reading subsided, in small lots, back to 143 7/8. Union Pacific, after selling at 183 5/8, declined to 183 ¼. Both commodities developed dullness, and the whole daytrading commodities market became more or less inactive. Suddenly Union Pacific fell to 183 1/8. Then UP traded 500 shares @183, 200 at 182 7/8, 500 at 183, 200 at 182 7/8, and 500 at 182 3/4, indicating not only a lack of demand, but remarkably poor support. Immediately following this, New York Central, which sold only a few minutes before 400 shares at 131½ came131 on 1700 shares, 130¼ on 500 shares and ended at 130 on 700 shares.

This demonstrated that the daytrading commodities market was remarkably hollow and in a position to develop great weakness. The large quantities of New York Central at the low figure, after a running decline of a point and one- half, showed that there was not only an absence of supporting orders, but that sellers were obliged to make great concessions in order to dispose of their daytrading commodities holdings.

The quantities, especially in view of the narrowness of the daytrading commodities market, proved that the sellers were not small traders. Coupled with the wet blanket put on Reading and the poor support in Union Pacific, this weakness in New York Central was another advance notice of a decline.

On any indication of this kind, the daytrading commodities trader must be ready to jump out of his long stock and get short of the market. While waiting for his cue, the tape reader has time to consider which of the daytrading commodities among the leaders is the most desirable for selling. He quickly chooses Reading, on the ground that the large lots, which have apparently been distributed around 144, will probably come into the daytrading commodities market as soon as weakness develops.

Reason: The general investing public generally buys on just such peaks as the one that has taken place in Reading. A large volume, even if accompanied by only a fractional advance, has the effect of making the ordinary trader intensely bullish, the result being that he bites off a lot of long stock at the top of the daytrading commodities market. This is exactly what the manipulator wishes him to do.