This market is trading in a range right now between 8500 and 8200. That means its hard to swing trade, position trade...well just about anything that last longer than a day. You can get some great active trades if your nailed to your computer most of the day, but playing this long term right now is hard. Trust me I know. I get into some good swings make some money, then i find another great looking swing and the market falls apart. It happens to the best of us sometimes. All i can tell you to do is the same thing i am doing....stick to your plan. If you are not an active trader just remember cash is a position. It is your safety net when you are not feeling comfortable trading a crazy sideways market. So dont feel bad sitting in cash while the rest of the gang are out making money actively trading. We all have are own risk tolerance.
Happy Trading
The beginning of the holiday shortened week saw the Dow starting off by
testing the 8230 support level and then sharply turning around and rallying over
250 points from the low of the day. What appeared to be an end of
the day sell-off was quickly diverted and became an end of the day push back up,
bringing the Dow within 20 points of the high of the day. The Dow Jones
Industrial Average closed the day at 8473.49, up 196.17 points. The S&P 500
gained 23.33 points, to close at 910.33; moving back above the key 900
psychological level. The NASDAQ was the big winner today, gaining nearly 3.5% to
close at 1750.43, up 58.42 on the day.
It is always a good idea to keep an eye on the market setups
that we send out every morning. Here is a summary of what happened to those
stocks today. As a group they closed up over $9.00! Did you catch a piece of
those moves?
FISV closed up $1.21 at $41.93
TWTC closed up $0.75 at $11.91
JOYG closed up $3.07 at $32.30
GIL closed up $0.70 at $16.52
OIS closed up $2.01 at $25.33
TS closed up $0.79 at $29.50
JCG closed up $0.17 at $19.89
CAM closed up $0.73 at $30.26
Kipp
I have been reading from different sources that this may just be a suckers rally and how it has compared to all the other rallies off bottoms and after recessions/depressions. That is all good and well looking at history, I mean after all we use the history of the previous days, weeks and months to help us trade these markets everyday. But is this a suckers rally? Should we be scared to go long? Are we just being paranoid? I think its ok to be all of these things, scared, paranoid and whatever else you are feeling. You have heard me say this before….trust the lights and trade your plan. You can trade any market and in any condition its in if you have a great trading plan. I know a lot of people that have sat out on this rally and I know a lot of people that have made money going long this market. The ones who sat out are scared and have actively traded this rally, not staying in too long afraid of the next collapse. But the market continued to push higher and stocks have continued rally and those traders have missed out on the bigger picture, the bigger gains. But they stuck to their plan and took a little off the table when they got it and they are not trying to be greedy. I think a lot of people are gun-shy in this market and they feel comfortable staying the course as an active trader.
On the other hand we have had people pick some cheap stocks off of lows and they have done pretty good. And they are still long those stocks looking at the bigger picture. Some of those charts may not have indicated a solid buy, but those folks were ok with taking the risk.
Soooo.... What type of trader are you? Do you have a plan or are you sitting on the sidelines to see if this is a real rally or not? If you are the one sitting on the sidelines then you are missing out. For one, the way to trade is to take the emotion out of the trade. Don’t fear what might happen, because then you sit on the sideline and get sucked in at the top or bottom and the trend reverses after everyone made the easy money. The only way I know to take the fear out of the trade is a solid trading plan. Even if you take on a little more risk than you usually do, your plan will let you trade with confidence. This is the way you take advantage of a reversal, suckers rally, real rally…..whatever they want to call it, it wont matter to you. Because if you get caught up in the suckers rally and the market start’s to tank again, your plan will take you out of the market “suckers rally”. But if we continue to move higher from here, your plan will keep you in and you can take full advantage of these moves.
So I am here on my soap box telling you to trade your plan, it’s the same old song and dance from this one trick pony. But I’ll tell you what; if you do this one thing, all your worries about if this rally is real or fake wont even bother you. Because your plan is going to work, even if you take a small loss or lock in big profits, you plan guided you through these tough times, while everyone else is trying to hold their heads above water.
Happy Trading….
As I review the long, mid and short term trends of $DJI, everything I see in the charts tells me that the markets are moving higher, but in my mind I can’t accept it. Why is that? Is it the fact that most of the U.S. banks will need to raise more capital to survive? Is it that Chrysler is bankrupt and GM is on the verge of bankruptcy? Is it that the unemployment rate is at highest levels we have seen since the early 80’s? Or is that the earnings reports for most companies have been lackluster? You would assume that in light of all of this negative news, the stock market would be moving lower; yet it isn’t. The markets continue to push higher. In this market you must trust what you see in the charts and cut out the “noise”. Most importantly you must remain nimble in this market, because when you least expect it, you could be blindsided. Today brought another day of volatility, with the bulls leading the way to the finish line. The Dow ended the day up 101.63 points, to close at 8512.28. The S&P 500 ended the day up 15.73 points, closing at 919.53. Although the NASDAQ spent most of the day in the negative, it did manage to finish the day up 4.98 points, to close at 1759.10.
Check out the mid term chart on DIA. We are forming a cup and handle pattern which is a bullish indicator. We are still bumping up against resistance in this 8300 area, but it is looking stronger. We could very easily break through this resistance and test 9000. The thing is...and you know what they say, "Sell in May and go away." http://money.cnn.com/2008/05/01/markets/sellmay_markets/index.htm?postversion=2008050104 . I wanted to post this link so you can read further into what i am talking about here. This is the catch, will we follow the old saying or is this a new market? This isnt the market our parents and grandparents grew up with. I agree with George Thompson, i dont think the worst is over, but the software is telling us the buyers are here and they are buying. I think the real question is....are they here to stay? That i cant tell you, i look to the charts to tell me what is going to happen in the market next. And the mid term on the DIMONDS (DIA) looks like it could move higher, we just need to break above 8400 and test 9000. I thought earnings season would be worse than it was and we would see the market pull back a little more than it did. It didnt happen, we traded sideways and chopped around for a couple of weeks. But go back and look at the mid on DIA, the up trend was on heavier volume than on the pull back, but the volume was much lower than the sell off we had at the beginning of the year. I would love to see volume pick up on the next up trend to confirm the move. I would hate for this up move to be a head fake to more selling, so be smart....USE YOUR STOPS AND TRADE YOUR PLAN.
Happy trading,
