Today showed what I have been trying to explain to this board:
Do your TA on a,b,c and d.... then you will be very successful in this stockmarket. My portfolio is up 6.131% this week Not great bu not terrible either. This is the strategy I use:
Remember the strategy I already outlined in some previous posts:
every morning you should quickly combine an analysis of the 4 main aspects of the market (for TA I use candlestick interpretation a lot):
(a) TA on Asia and Europe
(b) TA on US indexes
(c) TA on sector you want to be involve in
(d) TA on equity you want to trade that day
(e) bla bla about PE, product, market share, growth is not as important these days.
If all are in sequence... go with the trend.
That is exactly what happened today, for all of us to see!!! If you bought on the early dips you were betting against trend a and b and c and d.... Now THAT is complete speculation, in my book.
This morning analysis showed:
Asia down,
Europe down,
US indexes down,
High tech in down trend and
CPQ and Dell in downtrend yesterday...
What did that tell you: better go with the trend and sell this morning while finding some stocks to short. The US has not taken the leads recently and you HAVE to trade WITH the trend.
I was suprised about the extraordinary resilience today, at the beginning of the day (many hoping for a buy of on the dip and a January effect!... but the shorts and sellers took over and panic selling ensued in the techstocks in particular.
Because of the early morning resilience and the ridicule aspect of this panic selling, I believe that today was the day to close short positions and start buying some equity. That is risky because we don't know Asia and Europe reaction to US crash... BUT panic selling usually is followed by a rebound (even if it is just a dead cat bounce) I am willing to bet (and I did by buying some CPQ at 57 1/4, and closing all my shorts with a profit) that a rebound is in the making for Monday... possibly big rebound.
Good luck.... but for the longs, you should see that you are not much better off than last July while some traders alternating shorts and buys are snatching a few % points here and there. Just my feeling about trading this market. Good luck
Gaston |
