What I find among short-term traders is that they often will presume that breakouts will continue in their direction without actively planning for the possibility of retracement. When we see that stocks have broken to new highs (as we did this morning), but that other asset classes aren't participating significantly and that the number of stocks making new highs has been waning, we want to actively build a scenario for a possible reversion trade. Once the correlated asset classes begin to retreat, stock prices stall out, and we see NYSE TICK pulling back, we're then prepared to act on the scenario we've built.
It is much easier to act on market action if you've visualized and planned for it in advance.
