The I'm mad as hell (MAH) trade combines the concept of the TRT along with a long weekend or a holiday, such as Memorial Day, Thanksgiving, or Labor Day. As with a TRT trade, the MAH trade requires the market to have been in a sustained trend. And as we know from the psychology of the TRT, when the market has been in a sustained trend, there are traders who have made numerous attempts to pick a top and have gotten their clocks cleaned (vice versa for a bear market). Now, the long weekend comes. The traders are sitting at home over Memorial Day or July 4th and they're miserable about how they've been on the wrong side of the market for so long and how much money they've lost. Maybe their spouses are now even giving them market advice! They've reached the point where they can't take it any more. They say "uncle'' and are resolved to get the hell out of their losing positions as soon as the market reopens. If they've been short in a rising market, they're going to buy the opening. If they've been long in a falling market, they're going to puke on the opening.
At this point, when human emotion is capitulating, the result is that you're going to see in the market gap up or down in the direction of the prevailing trend. Those traders who are frantically trying to achieve peace of mind are basically creating that gap. Then after these people have finally thrown in the towel, lo and behold, the market retraces back to the prior session's trading range. The top or bottom that they've been trying to pick for so long is finally in, and they're no longer involved.
For example, in 2000, Qualcomm Inc. (QCOM) had a trading range of 640 to 660 on a Friday prior to a long weekend. Over the weekend, some analyst predicted that Qualcomm would eventually trade 1,000. After the long weekend, Qualcomm gapped open higher and traded to between 680 and 685. However, later in this day the stock retraced back into Friday's range of 640 to 660. Qualcomm never traded higher.
Combining the TRT concept with this MAH trade, what you're looking for is a gap to a new high, followed by an A down, then a failed C up and then, finally, a retracement into the prior trading day's range. When the market retraces back into the prior trading day's range, it's time to put on a short position if you haven't put one on already.
What makes the MAH and TRT setups so effective is that the history tends to repeat itself in the market. People tend to panic and make the same mistakes over and over again. Identifying when these setups occur can help you anticipate changes in market direction and profit from other people's misery.
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