Tuesday, May 18, 2010

State of the Market - 5/18/10

After showing some strength yesterday by pulling the market all the way back up from morning lows, the bulls didn't show up today, as stocks fell right from the opening bell and ended the day with decent sized losses.   The decline was steady throughout the day and the action was not bullish in the least.   Before today, I thought that the market might bounce a little further, but that obviously didn't happen.  What is happening is that the markets continues to chop around violently in a wide range and things continue to be difficult in terms of my style of trade.

I am looking at gold here but really that is about it - I don't see a need (or a good reason) to do much else at this point.   A break of yesterday's lows will probably bring in more selling, so if you're day-trading, you can still play this market short.   However, longer-term, I still think this market has at least one more test of the 50 day moving average in the future and it's at that point that I may look at putting a few shorts on.   Right now, however, there is just isn't much attractive out there for me. 

Good luck Wednesday - if you're not trading like me you may be a bit bored, but knowing when to sit out is part of trading - a very important part.   Congrats as well to Don for winning the free pass to the Stock Bandit's Advanced Trading Course.  Here is a bit of his email...

"One example was a day trading system that was initially very successful.  It was a live feed where buy and sell signals were e-mailed out during the trading day.  I followed this system for over three months and found it was successful over 60% of the time.  Then he offered his first seminar and I jumped at the opportunity.  At the time during the seminar, he openly commented that he was concerned that some of the individuals in his course were brokers. During the seminar everyone made money on his recommended buy and sell signals.  I made enough money to  pay for my trip and stay.  I witnessed one individual next to me who invested large sums of money and made over $30,000 on one single trade.
 
We all went home very happy with the technique.  Within the next month or two the technique continue to be successful but slowly one could tell something was changing.  Fewer and fewer trades were working.  Eventually, his technique was completely worthless.  He even commented that there appeared to be forces that were at work that were robbing his system. 
 
I am therefore very skeptical of the any system that claims to be successful.  I am somewhat convince that there are computer systems out there capable of squelching techniques that have any repeat success."

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