At the moment, it is really tough to invest (at least for me).
The chart would tell you that market should've shown some pull back starting at 8800 level, even if it's going to bounce through later.
Market did find some resistance at 9000 level yesterday and despite the little pullback after the market, it sure looks like it wants to run up a little more.
Current news tells you things are deteriorating each day but since the stock market is about 6 month forward looking, the effects of Obama's economic stimulus plan, over trillion dollars of rescue funds, and potential second life for autos, combined with some longterm bargain hunters, market is acting like we have the bottom made in November.
Before I have been favoring stocks to short on rallys, I am beginning to switch my thinking and I think I should look for stocks to buy on falls.
However, I'm a swing trader, so I'm open to play both call and put options at any given day, but having a clear bias helps to formulate my strategy.
No 1. rule in trading that all books and training materials I've seen talk about is "Ride the market and don't bet against it" and "Befriend the trend".
This market is as tricky as I've seen...EVER... What are your thoughts of current market?
Agree. This is the most challenging time to invest that I've ever seen. The only thing that's worked for me this year is a long-short portfolio. Held SH since Feb, along with some balanced funds & govt bond funds. But during bear market rallies, I wasn't making much (if any) money. My SH assets grew too big & held back gains on up days.
So during this recent bear market rally, I hedged about 55% of SH with IVV. That worked, & made money both up & down days. I don't make a killing on a down day by being mostly short, & don't make a killing on an up day by being mostly long. But this long-short portfolio made some money in both scenerios. I'd rather make consistent $, than get killed on a huge day up or down.
This is a really tough, unpredictable environment. But now the bleeding on a huge day up or down is stopped. Have not sold SH yet, because I'm not convinced there won't be another big drop by mid-09. But at least the small IVV hedge will save gains on a day up. It sounds ridiculous hedging a hedge, but that's the only thing that worked for me in a ridiculous environment!
that's the only way(strategy) will win the market. Not making a killing but consistant on making profits,and making profit is our main concern now. If I cash out 20k per month I'm ok,not greedy. I do not leave my gain in my stock acct anymore, only what I started with. Straddling works either side of the market. I'm still bearish but accumulate only at 1000pts drop and lower.
You said it all "Cowboy".Today more layoff news and market want to continue dragging on the rally or holding very well. I coverred all call positions yesterday and wait for a pull back at 80-82. Anything above 90 is more put opportunity for me. I still see 78-80 before the "OBAMA EFFECTS" rally next year. Patience! Bears seems to get really paranoid every time Dow bounce back 1500-2000pts,which is normal,can't expect it to down all the time then it is too easy for us to make money. Look like not much action today for swing trader like us. I strongly believe we will see DOW at 78-80 by nextweek,before christmas rally begins. This "rally" prediction is go with market flow,not by my T/A reading. Good Luck.
Hope that 78-80 call comes true because I am still sitting on my DEC and JAN low 80s puts I want to unload! This market is becoming very illogical to me. I just made some crude oil and energy sector plays but with JAN 10 calls so nothing I need to watch too closely for now. Seems like a much safer bet for now unless you really believe we are heading for another great depression.