Read on Twitter
Some thoughts on the $IDEX debacle that's actually still playing out to some degree. It's late and I'm very sleepy, but wanted to get this off my chest...this is similar to the whole $NOVN mania that happened a week ago, also similar to the $BYFC insanity we saw last weekend...
It's the classic case of a stock going "supernova", "parabolic", whatever you wanna call it. $IDEX did just that. I traded it twice, once from 1.12-ish to 1.54 (breakout from the bull pennant), then the blue sky from 1.99 avg to 3.29. After that, I didn't mess w/ it anymore, just
watched the mania unfold. After the meteoric rise to 3.98 (where distribution began to happen, a.k.a. strong hands to hot money), of course it was only a matter of time before it would come crashing down. I think many novice traders get absolutely ripped in this market because
they don't quite understand the "lather, rinse, repeat" cycle of price action. There's always a base, a rise (markup), distribution, then a fall. Happens like clockwork all the time. Big hint of the night--if a stock is already over 100% from its base level ( $IDEX did far beyond
that), it's HIGHLY LIKELY (not in all cases, but in most) that it will not continue skyrocketing w/ the same velocity. In other words, it's gonna need a freakin' breather. Telltale signs of distribution are insane amounts of volume and vertical spike of stock price; $IDEX had...
both. But the hype around this stock (and I'm not gonna point fingers at anyone, there's been enough of that already) had people (particularly newer traders) thinking it was going to $10 within a week or whatever. That CAN happen, but rarely DOES happen, especially when
you've got a day like 6/22 where 362 freakin' MILLION shares of $IDEX changed hands in one session. To a trader that has seen this movie a thousand times, this is the distribution phase, where shares & money change hands at the peak of a move in price. There is almost ALWAYS a
significant decline in price, SHORT TERM, after this type of activity. Doesn't mean it can't hit its long-term price targets (whatever they may be), but rest assured, it's not gonna keep clicking along at 8,000 RPMs indefinitely. The biggest issue I see ( $IDEX being a great...
example) is traders not focusing on PRICE ACTION, but instead banking on future promises, a stock's "potential", the management team, quarterly filings, pending purchase orders, pending PRs, blah-to-the-blah. After doing this for nearly 20 years now, I can confidently say that
none of that matters more than what the stock's price is CURRENTLY DOING. Not what you EXPECT it to do, but what it's currently DOING. As was the case with $IDEX, which many say has great "promise" (jury is out in my mind, don't know who to believe), what the stock's price is
doing is all I really care about. Just my opinion here, but everything that I will ever need to know about $IDEX or any other stock is being reflected in its PRICE, every single trading session. And if you think about it, that's the only reason why people trade anything to begin
with--they hope that the PRICE will be more than they bought it for at some point in the future. CEOs can lie. There are professional accountants who are wizards at "earnings management" (cooking books). Financial filings can lie. But the one thing that NEVER lies is PRICE. Those
price charts and volume stats tell me everything I need to know. The ONLY reason I entered $IDEX was b/c it was forming a bull pennant, one of the most reliable patterns out there. It popped out of the pennant just as I expected. I don't care who runs the company. I don't care
what promises they're making. I don't care what their last 10K said. It's all reflected in PRICE. And I let price and price ALONE tell me when to get out. Not saying that anyone has to do it like I do, but after nearly 20 years of trading, I have discovered that the rest of that
stuff is largely a waste of my time. What's the price doing? What's the chart looking like? How's the volume? Those are the three things that can NEVER lie to me. To new traders, don't be afraid/ashamed to TAKE PROFITS when the market is giving you insane percentage returns in a
very short period of time, a la $IDEX. Are you kidding me? Fund managers are high-fiving themselves over 1.5% annual returns and we're trying to hold through 100+% returns in only a couple of days? TAKE PROFITS. Don't let greed or FOMO cause you to hold these names indefinitely
without taking profits along the way. You just might end up holding a bag after watching the stock go to the moon AND BACK, and now you've lost your TIME while your account looks no different after the roller coaster pulls to a stop. I'm mad sleepy at this point, sorry for the
super-long thread, hope it helps someone out there. God bless.
