Does anyone else here feel like they're fighting a monster that's just too big lately. I wake up this morning with the dow futs off over 100 pts and the sp's down 14 and change. Of course I'm pretty long overnight. After last week's carnage, you'd think that a monday gap up would be gamable.... Guess not. I've taken one short in a week now, and the long side just feels hopeless. I know that eventually I'm gonna hit some monster homers when this thing bounces, but it really blows to have to loose a few k every day before we get it right.... anyone else agree, or am I just overfrustrated lately with this market for those of us who only go long?
although i'm new in the business and probably should not give any advice - there's on thing i always wanted to avoid: do not consider the market as a monster or wild animal or whatever. here is a good article about this: http://www.ruthroosevelt.com/article_metaphor.html i like the one with the "market as river ..." best - or "market as a friend ..." - like everybody - also the market has good times and bad times - you should like the market also in his bad times i would say.
P2, I feel your pain. Okay, let's just say I sure understand. The only positions that made any real money for me last week were all shorts...and I don't particularrl;y like shorting stox. I did a couple of "hopefully" long trades and got burned on almost every one of them. WHen I got up this morning the Dow futures were down 100 points...as I write this they're doing a little better...now down 64. I'm not going to try to hit that magical bounce that signals that the market may soon be bullish and/or have an up day; I'm just going to go with the flow and try to make money as prices continue their downward slide...shorting whenever I can get an order filled. Good luck to you today and the same to everyone on this board! Gin and tonics are on me this afternoon. We may need 'em. Best regards, Jim
p2, Fight the good fight.............go short my friend! The market is not telling you to go long at this point, unless you are packing away some long term holds in an IRA. Good Luck though.
I think I understand P2's dilema - going short is the proverbial fighting the FED while NOT going short is fighting the Tape. Both are a No-no for any trader. What scares me that we had 7 fed rate cuts already. Whithout them we would have a depression in CA already. I just have more faith in the Tape hence I am long 5% and may even get out (I don't know how to lighter up on 5% so maybe just stay pat) I rather be shot on the next rally. We are headin into "the long dark tunnel". This whole affair re-inforces my thinking about my old mistakes and new. Never try to buck the trend and catch turns. When turns happen then you get on the bus and try to ride it. We have not seen the bottom and sentiment says it will take longer and maybe even deeper than technicians would like to believe. There is nothing holding us at the double bottom unless spooz rally up 50-80 points this week !!! I does not "smell" like it will happen. And even so it will be a bear rally which one must short. Maybe the best thinking is to do nothing and stay is cash. Cash is KING !!!!
Lately I've been swing trading index options rather than individual stocks. It's the only way to get the kind of movement I like. Trading NDX and SPX puts has been very profitable. While most of the time I trade based on TA, I have to say that I don't believe we've even remotely seen the end of the downside in the markets, particularly the Dow and S&P. Next month when the Japanese banks have to mark to market to deal with their bad loans, we'll see major selling of their US holdings in both equities and real estate. Add to that the next round of earnings news and warnings, and I think we could see the Dow and S&P lose another 40-50%. JMHO.
It is often said that one shouldn't "Fight the Fed" or "Fight the Tape"; quite a conflict. However, the time frame one is trading within must take priority. Sounds like most on this site (including p2) are not really trading longer than a few weeks and more likely a few days, so you must trade with the tape until the tape agrees with direction of the Fed. I don't know why market participants haven't rallied the market after so many rate cuts so quickly, but to trade profitably I don't have to. The market will tell me which way to trade. In other words, trading with the Fed implies fundamental analysis is at work while trading with the Tape implies technical analysis. Trading short term based on fundamentals can be dangerous because no matter how great things are supposed to be, profits and losses are generated based on how things actually are. Why not "Fight the Fed" for a while, this thing will turn slowly enough to know when it does then we can all get on the bus! Good Trading!