Caracal, what the hell are you talking about? After about two hours of range-bound trading, the equities had that slow, steady grind upward for the rest of the day. I think the idea was to buy the pullbacks. In fact, the pullbacks were so shallow and brief for most of the day in the equities that any monkey could tell it was a classic trending higher market.
Puffy: it's that monkey that tells you that your favorite oscillator has been flatlining in the overbought region for the last three hours. aka: sell a leaper, buy a creeper. As for me, I was too busy looking for bids to hit in the bond markets. No sense in working an offer.
Look, I am not trying to be a wiseguy...BUT look at a daily chart of the SP500 since 10/16/02...and you will see that selling strength, and buying weakness has been a hallmark of this mkt. for 1 month! Why fight it?
First rule of successful daytrading: THE TREND IS YOUR FRIEND Buying weakness is going AGAINST the trend. Just because the market has bailed you out a few times recently doesn't mean it's a sound strategy. You'll get smoked in the long run. Just ask Lundy. He's been buying on weakness for the past few months and averaging down into more weakness.
A trend is higher (or lower) highs and lows, appearing on a daily candlesticks chart. If you don't have that, you probably have a trading range. You trade a trend by entering a trade when prices break a resistance or a support, and using a ma crossover based on daily closes as a signal. If it breaks a support/resistance and at the same time crosses your ma, you can make your trade, placing a stoploss at the resistance/support level. You trade a trading range by entering a trade when prices bounce off a resistance or a support, and using an intraday ma crossover as a signal. If it bounces off a support/resistance enough to have a crossover, you can make your trade with a stoploss at the resistance/support level.
Interesting thought- every newbie and their grandmother learns early on that "the trend is your friend." Yet 90% of traders or whatever still lose. Is it because they are all too stubborn to follow such advice? Or is such advice not really useful afterall? If you study the nature of trends you'll realize "trading with the trend" is no harder or easier than "counter-trend trading". The problem is one of (trend/momentum) recognition vs. persistence superimposed on probability vs. risk. Objectify these four elements and plot your matrix and you'll understand what I'm talking about.