ROBIN NAILED THE MOVE ONCE AGAIN THIS WEEK. EXCERPT FROM THE CHART ANALYSIS LAST SATURDAY 12/27/2008.
-“Volatility is lower evidenced by the VIX in the mid 40s. The chart indicates the same with narrowing of the bollinger bands and the formation of a symmetrical triangle. Volume has been extremely low for the most part due to the holiday season. I feel that we will go up to test the 9000 area. Note how the market reacts at that level to give you clues on further movement.” The DOW closed last Friday 12/26 at 8515 and finished this week at 9035.
Middle East turmoil translated to a DOW drop of 32 points to open the week. It was a light volume affair primarily due to the holiday season.
Stocks rose Tuesday amidst a $5 billion capital infusion into GMAC. It now appears unlikely that GMs demise is imminent. The DOW posted a 184 point gain.
The market closed 2008 on a positive note with the DOW moving up 108 points. The VIX continued to drop and Initial Jobless Claims improved. 2008 was the worst stock market performance in almost 80 years.
The DOW closed at 9035 up 258 points in the first trading day of the New Year. The poor ISM data was largely ignored as energy stocks led the way higher.
Week over week, the DOW was up 520 points, the SPX better by 59 and the COMPQ up 102.
Go here to learn how to trade like the pros!!
ECONOMIC REPORTS
MONDAY 1/5
Construction Spending, Auto Sales, Truck Sales
TUESDAY 1/6
Factory orders, ISM Services
WEDNESDAY 1/7
Crude Inventories
THURSDAY 1/8
Initial Claims, Consumer Credit
FRIDAY 1/9
Average workweek, Hourly Earnings, Non Farm Payrolls, Unemployment Rate, Wholesale Inventories
EARNINGS OF NOTE
MONDAY 1/5
MOS, PNY
TUESDAY 1/6
AYI
WEDNESDAY 1/7
BBBY, FDO, BLUD, MON, RT, SONC
THURSDAY 1/8
APOL, CVX, HELE
FRIDAY 1/9
KBH, NFLD
It is the time when we all make resolutions for the upcoming year. I only have two. They are the same two that I embrace every year.
· #1. Don’t lose money.
· #2 Don’t violate rule #1.
The only way that this can consistently happen in the stock market is to employ a hedging strategy. Professional traders hedge their positions. You must consider doing the same. The hedging strategy should have embedded in it, the flexibility of adjusting the position to accommodate trend changes yet maintaining the hedge. If the market breaks out either bullish or bearish or for that matter merely remains flat, the trader still has the ability to optimize the market condition and maintain a protected position.
As you continue to develop as a trader, you will likely begin to develop the ability to call short term trends in the market. Even when you add that ability to your tool kit, it continues to be crucial to remain hedged. Unforeseen events can happen that can dramatically affect stock price and when that occurs; you want the ability to preserve capital.
Learn to follow the market. Don’t buck the trend but rather, go with it. Life will be a lot easier if you do that. It seems that many traders want to pick pivot points. Having that ability can be profitable but not necessary to be effective in the market. If you lost a lot of money in 2008, do not try to get it all back in one or two trades. I call that “Revenge Trading” I used to coach football and when we found ourselves 1st or 2nd and long it was important to realize that we didn’t have to make the 1st down in one play. So goes it with the market. If you are down, get it back a little at a time. If you plunge, more than likely you will regret it. Remain diversified and pay attention to position sizing.
If you want to trade like a professional, I encourage you to look at the free lessons at www.marketamer.com. Best, Robin
Monday began with poor quarterly numbers from TM and WAG. Volume was low as expected due to the Christmas holiday week as the DOW closed down 59 points.
Tuesday continued the low volume theme as Existing Home Sales were down 8.6% in November and GM and F received downgrades. The DOW was off 100 points.
Wednesday was a short trading session ahead of Christmas. Jobless Claims registered a 26 year high and Consumer Spending and Durable Goods were weak. The DOW gained a marginal 49 points to close the trading day.
Friday’s trading was uneventful as AMZN reported their best holiday season ever and the DOW finished the day 47 points higher.
The market was down week over week with the DOW off 63, the SPX weaker by 15 and the COMPQ 34 points south.
Learn to tame the market here.
ECONOMIC REPORTS
MONDAY 12/29
None
TUESDAY 12/30
None
WEDNESDAY 12/31
None
THURSDAY 1/1
None
FRIDAY 1/2
ISM Index
EARNINGS OF NOTE
MONDAY 12/29
CALM
TUESDAY 12/30
None
WEDNESDAY 12/31
None
THURSDAY 1/1
None
FRIDAY 1/2
None
It has been a long and for many, very tough year in the stock market. However, for some traders, this has been a very profitable year, It is my sense that most investors are only “long the market” and view their hedge against a downturn as diversification and allocating funds to “defensive stocks”. Although this strategy can help offset some of the loss, when experiencing the melt down that occurred in 2008, the market does not discriminate as to which stocks it chooses to crush. The market just hammers everything.
It is my experience that most traders are not comfortable “shorting” the market. When a trader chooses not to take advantage of a market trend such as we have just experienced, it limits that traders’ ability to optimize the returns available. There is an old saying in the stock market “The market goes up like an escalator and down like an elevator.” That is so true. Money can be made more rapidly in bear markets as opposed to bull markets. It is not only prudent but smart to take what the market gives you. The market is going to do what it wants to do. Why not just follow it. The street is littered with those traders who have been trying to pick a bottom. It is not necessary to pick the bottom in order to be profitable. In the meantime, had you just remained with the trend, you would have profited handsomely. There are several ways to play the market short. 1) Short stock 2) Inverse ETFs 3) Options. My suggestion is that you become familiar and comfortable with playing the market in all directions so that you can be consistently profitable regardless of the market conditions.
If you are interested in learning how to do that, I would encourage you to take the free lessons at www.marketamer.com. Make it a happy and prosperous new year. Robin
The DOW began the week pushing the Index down a mere 65 points on continuing news on the Madoff Ponzi scheme. No resolution yet on the automakers.
Tuesday, the DOW rallied big time to post a 360 point gain as the Fed lowered the Fed Funds Rate to unprecedented levels of between 0-.25%. It became apparent that the FED is prepared to do all that is necessary to stem the tide of economic disaster.
Wednesday, AAPL announce that Steve Jobs would not be addressing the crowd at MacWorld. The announcement fueled speculation that his health is an issue. MS reported poorer numbers than expected and OPEC cut oil production as the DOW closed down 100 points.
Thursday, the DOW shed 219 points as Leading Economic Indicators registered their weakest numbers since 1991. The Philly Fed and the Labor Departments’ reports contributed to the poor showing in the market.
We closed out the week with options expiration and a White House announcement that 13.4 billion will be extended to the automakers from the TARP with another 4 billion available in February. The DOW closed down 26 points.
Week over week, the market was mixed. The DOW was off by 51 with the SPX gaining 8 and the COMPQ up 23.
Go here to learn how to make money in any market condition.
RSS feed
