SOHU, Daily Chart

Back in late April I wrote a post called Chinese Net Stocks Top Out? which turned out to be a laughably bad prediction. SOHU was around $14 when I published that and yesterday it broke above $40. So much for picking a top.

Picking tops and attempting countertrend trades in strongly trending markets are both cardinal trading sins. It makes more sense to trade with the trend and leave the top picking to the show-offs. As you can see from the daily chart above, SOHU has been trending higher since March 13th without a single reversal bar.

SOHU, Hourly Chart

You could drop down to the hourly chart to execute trades in the direction of the daily trend. Even if you were trading off the 10-minute chart, it wouldn't have paid to short the reversals since the larger trend instantly reasserted itself.

SOHU, Daily Chart with Elliott Wave Count

Looking at the conventional Idiot Wave count you can see that SOHU was in the third wave up (both major and intermediate) back in April. Idioticians counsel that the third wave is the most powerful one and only fools would look short during that push. This fool has to stop fighting the trend. ;-)

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