Wednesday, January 13, 2010

Daily review - January 13, 2010

The market started up. The market went down. The markets went up. The market consolidated. The market went up. And that's pretty much it. If this review shows my disinterest in the markets right now, I do not apologize for the same.

The morning session was actually pretty crazy. Most of the momentum stocks were actually a pretty wild ride. Let me give you an example here - CAGC, our chart of the day yesterday. It was down almost 7% in the morning and ended the day up almost 7%. Good Luck playing that! Actually you could but if you are a small account trader like me and have to live with the pattern day trader rule, its not worth the risk of getting stopped out repeatedly and not being able to day trade for the next few days. And make no mistake - if you cant day trade in this market, you don't trade. Of course, you could be a masochist!

I could put charts of the individual indices here, but really, what's the point? Job numbers come out tomorrow, so the market will react to that. JPM reports on Friday and that's what I am waiting for. Let the big boys start reporting and then we should get a fair idea on how to play the earnings season.

Personally speaking, I entered into one small trade today - FAZ. I blogged about it earlier in the day. I was quick to get in and sure enough, was quickly thrown out. After that, I just didnt feel like trading today. I haven't felt like this in a long, long while. I have been trading a lot since December and have done pretty well during this time period. But today, I just didn't feel like it. In fact, I wasnt even seeing the markets, except for an occasional peek at cnbc (the site, never the channel!!). Why could this be? Well....

1) After the stupid mistake earlier in the morning, I was punishing myself by not entering any other trade
2) I didn't want to enter any trade since I knew I wouldn't be able to watch the markets till around 11 tomorrow.
3) I knew I didn't have an edge in the market, so I didn't trade.

I would love to say it was just 3, but honestly speaking, I suspect it was a combination of all the above.

How to trade the next few days? Let the volatility be your friend. If you absolutely do have to trade, don't try picking the top or the bottom. You don't have to get the entire move in the stock, just the meaty part of it. That's how the best traders did it and still do it.

I might post a few picks later tonight. If you want any stock analyzed, just leave a message in the comments section.

Good Luck tomorrow! Be careful out there!

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