We're at support...Again.

DJIA MARCH 30, 2009

Here we go again!

Most stocks opened today at a GAP - when there is a gap between the last candle and the present candle. This is interesting since the market has been on a rally lately.

Now we have this gap, not present here, but all over the place everywhere else.

DIA ETF MARCH 30, 2009

Now check this out, the DJIA ETF, the Diamonds. Classic gap. I can list all the examples I want, but a lot of EVERYTHING looks like this.

Now I'm not Cramer, but I would wait a couple of days before I'd do ANYTHING. Generally gaps have a habit of returning to the original level, but after that......who knows!

The Bull Market Comback?

Are we in a comeback? After what we saw in the market today, I'm sure a lot of people are hope full. After all, $1 Trillion is a lot of money. Is it enough to stimulate out of recession?

We are seeing signs of comebacks, but I wouldn't say 100% we're out of the woods. Keep in mind that I speak technical, not fundamental analysis. When I think something may occur, it's usually from what I see in a chart and not in the papers.

First, I made the assumptions that the market would go down due to a few indicators:

1) We saw consistent rally for several days, bouncing off a new low, in an existing downtrend. This was confirmed by a sell off last week.

2) We were between 20 and 50 day moving averages, and appeared in a great spot to sell off.

3) Secondary indications of an overbought condition.

4) Price was hitting an established ceiling.

However, as we saw, the market went UP. First rule of trading, know you are not perfect. Check. But now we know this information, let's see the case for a bull run:

1) Breaking the new barrier. That ceiling we were testing is now being broken, and we could have entered a new price band.

2) Commodities. I notice how commodities are looking like they are struggling to maintain their trends. This could indicate confidence flowing back into the markets.

3) Volume. Generally positive volume, and not really decreasing.

Although I think I made some valid points, I feel overall that traders are still undecided. The next few weeks may establish where the market may go. If we see a trend change, I'll be sure to tell you.

At Least I'm not Cramer!

This weekend I mentioned that the market may go down, and looking at the market this morning, I am obviously wrong. But hey at least I'm not Cramer. Although I failed to remember Obama's unveiling of the bailout when I made this speculation, I'm still going to hold to my guns this week and say that the market is still bearish.

I should probably say that if you are trading off my advice, DON'T. I'm mostly wrong about a lot of speculations, and I'm protected with my plan most of the time from this. I am not Cramer, please don't blame me if you lose money.

Rant about nothing

Well well,
Nothing much to talk about here. I look forward to seeing what the market does tomorrow. Is the S&P doing to drop tomorrow? I think so. I see a lot of stocks dropping tomorrow, but hey, I'm just speculating. I know I said that I though we were at bottom, and we may be. After all, we have been consolidating so much, I don't think the market would go much lower.

So here we are, consolidating, riding a channel. We'll probably drop again, but not real far (considering the past). But hey, we could CRASH again too, or even go up.

What do I know?

Bill Gates Looks Funny

I'm sitting here watching an interview with Bill Gates on CNN and I ask myself, "With all that money, should Bill Gates look better?" My answer is obvious, but maybe I am wrong. Maybe with all the money the Czar of Microsoft could "splurge" a little and get a nice looking wardrobe, maybe a cleaner haircut, who knows what he could do! My point is that he really looks like he doesn't get out much; I guess that is the case with most billionaires? Gee I sure hope not, but maybe that is the case. Oh well.

Nonetheless, the world has been to say the least interesting the last few weeks. I don't know how many AIG stories I have read in the last few weeks. My opinion, let them fail, and that bailout money for the institutions that would be in trouble if AIG failed. But that is my opinion.

Sooner or later I am sure that this fiasco will blow over, but when is a mystery.

Have We Hit Bottom?

Hello everyone.
The last few weeks are interesting at best. The S&P has been floating, literally, at a MAJOR support zone. As the price broke support, I was seeing a great opportunity. Last week we saw the S&P come up to test the new resistance, and what happens?

It broke through.

Now I was set up great. I was thinking it would kiss this new resistance level then walk off the cliff. But no, instead we saw the S&P climb, as it has for the last few days. Although we have consolidated and consolidated, my question is if we stay at this level, is this the bottom? Are we just looking for an excuse to drive the markets back up? If so, then what are we waiting for?

To be a trader today is very interesting. This isn't an arena where we know the overall trend. As I watch the markets today, I'm glad that I know what I know. Opportunity is here, it is always here, and knowing when to grab it is what we all need to know today to thrive in this market. I just wish the damn stock I'm watching right now would "conform" and go my way!

Needless to say, my plan is sound and I know that my position is not exposing me to a lot of risk. And this should be the same for traders everywhere. I run into people everyday that tell me what has happened to there 401k's, and the best advice I can give is to learn how to manage your money. I know the markets tanked, but honestly if there were a plan in place for some of these people and their life's savings, would we hear about people losing years of savings?

I am going to be talking about plans a lot, because it is important. It should be a cornerstone of a trader's career. I haven't been trading for long, but I like to reiterate the obvious. For anyone who invests, make a plan.

As for hitting the bottom, we won't know till after it's happened. But look around, and tell me, are the signs visible? Do you see what I see?

Creating a Plan

Hello everyone,
It has been a while since we last spoke, and I would like to again make a new suggestion to those who are hungry to invest. Investing can make you millions, and can make you lose millions too if you are not careful. One of the most powerful, and also most difficult idea to maintain, is to have a plan. Whether you are a real estate investor or stock, options, or futures investor, having a plan is THE cornerstone to any investor's career and to invest without one is dangerous.

I believe most people fail at investing because they is no plan. I am defining failure not only as losing money, but also not making money. Now if your plan allocates your investments returning only 5% a year, and you have defined this and met your goals, then your plan is a success! But if you throw your money into a 401k program, with no definite plan in mind of where you want you money to grow, then how can you call yourself a successful investor? This is typical of how a gambler plays; throw your money on the table, pick up the cards dealt, and hope you have the winning hand. There is no control here, no matter how well you define your skills to interpret your conditions.

Not having a plan introduces demons with your investments. First, the lack of rules creates an environment where conditions will affect your position that could be controlled otherwise. I am talking about setting up criteria in an investment, such as not buying a stock unless it matches a set of rules, or even not buying a property unless it falls into a certain window of characteristics. In example, if you have a rental property, and are having issues with cashflow because tenants are moving in & out, you could set a rule where you require a tenant to sign a longer term lease. Or with stocks, you may set a rule where you only but a stock that is in an established uptrend.

Second, be consistent with your rules. Don't deviate. How can you know how your program is working when you are changing it to fit your desires? Not every investment is rosy, especially now. So why would you deviate from rules that define your ideal investment? Sure you may take less trades, buy less properties; but the investments you do make will be well defined, and more profitable overall. John Wayne didn't go to Wall Street for a reason, so don't be a John Wayne there either.

Lastly, greed is not good. It clouds the mind. Motivation, and the desire to become a better investor is good, but often this feeling and ideology will morph into greed. Be aware and avoid this completely.

Until next time,
John