Monday, January 26, 2009

Sitting it out ....

Previous Trade day
Well the market gave us a repeat and traded yet again between the 804 and 840 range. Another sideways day on strong volume.

I had made a special update this weekend after my weekly analysis. This is quite an interesting turn of events and could be setting up for another big run to the upside. The market has held the 800 range much stronger then I anticipated. No matter how bad the news is the market has gotten comfortable and has set bad expectations regards any fundamental piece of information. We seem to be taking the attitude of bad news being priced in and investors running tired of having further drops.

I have to admit, its the first time in a while I am not 100% confident of a move into either direction. Back in July 2008 I was afraid of strong down moves and went 100% cash in august while we were still uptrending - while that gave me great protection for sep/oct I tried catching the falling knife in heavily oversold conditions just to see it drop further and still managed to loose quite a bit of money. In november I was confident of the bounce of the 760 range even before the confirmation was in with a rally that will last till January. In december I was strong on hitting 945 for a great short down and it occured - now what will happen next?

All I can say is we are well prepared, have worked out all our signs and are now just sitting and waiting for those signs to occur. If you ask me where we will turn? I do not know, the primary trend is down and I am confident we will close the year a lot worse then we started - however, asking me where we will turn next - I will not be able to answer but I tried my best to provide enough information for the market to tell us.

How to trade?
Due to our indecision I would remain on the sidelines, any trend that will develop will retrace so do not try to chase it. I would be very cautious on both sides of the trade today, long and short and do not make the mistake of looking at the past 4 trade days and blindly going long off the 800 or short off the 840. This is doomed for failure today. Watch volume carefully if you are to enter any position.

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