I have learned from costly mistakes, only to ever buy stocks trending up. Sometimes however, there can be a time when this should not be done. RMD offers an example. On Aug 28 rmd broke into new highs; trend up is continuing. Gann study does indicate not to be a buyer on this day however.

The gap up completed a 100% repeat price run, 90d from the previous top; an extremely good probability for a change in trend, rather than continued up move. It is possible too, that the break may have occurred on good news being released though I do not know this for sure; if so, Dow theory adds further weight to our prognosis not to buy.

The gap up could also have been exacerbated by the large short interest in this stock - see our earlier posting. Only amateurs short higher tops, of which there were plenty this past year in the US, shorting rmd.

Virtual email #46 showed rmd was on our watch list for a buyable break, though we did not at this time buy, for the reasons above, and as outlined in the email. I have found a study of the works of WD Gann exceedingly profitable, once I sorted out my psychology to stop shorting higher tops.