It is widely accepted as common knowledge in trading that new highs in
securities such as stocks, bonds or commodities (or any index for that
matter) is a bullish technical event. The simple logic behind it is
that when a stock makes a new high, everyone holding the stock at that
point is profitable and therefore, you don’t have any remorseful buyers
sitting at a loss, praying for the stock to get back to their entry
point so they can sell and just breakeven.
However, there are times when breakouts to new highs can actually be
very bearish technical events. This is most often the case during
topping phases in the markets when the institutions (smart money) are
handing the bag to the retail traders or investors (often referred to as
the dumb money)….no hate mail please as this is just a general term and certainly does not apply to yours truly or anyone reading this post!