When the markets are in violent smack-down mode, I seldom write many words. I usually post charts that tell the story. That’s because I’m usually warning about the dangers of an impending market reversal. Those who have been in the business longer than 3 years know that the higher the price of a stock, the riskier it becomes–absent news. Many newcomers truly believe that the more a stock travels in a given direction, the easier it is. Lemme tell you; when it gets too easy you must be prepared for the violent smack down.
We’ve watched and warned that the tone and tenor of the market has changed with government hosility. We’ve watched the Eurozone burn. Yet the wonder of the markets continued. Watching and listening to the market lie and being blind to the truth is the cardinal sin of market participants. It is OK to miss a little, to leave something on the table. There will always be another opportunity around the corner.
I say this because whether you are a day trader or a long-term investor, I don’t want to see you succumb to the repeted and classic mistake of the Siren’s Song–especially after a 100% rally. I know that following the trend is your mantra, but it is usually wise to sell when its easy and to buy when its difficult.
Scott the Worrier has spoken!
Today’s market came close to testing the 1150 area of the primary breakout. While the market’s were down 2.5% yesterday, the vast majority of long investor’s lost 5% or more. In one day. Many, many stocks are pulling back to test their latest primary breakouts. The rule of thumb is easy. Look at your stock. Look at the latest breakout. That will be where the stock pulls back to and should be bought.
But there are still fires burning. Being a spit away from 11000 and 1200 makes for a continued risky environ. We are in the process of breaking the back of investor and trader complacency. Don’t get nervous and jerky. Know that this is a market inevitability and get ready, but have patience…
ADDENDUM:
This negative action comes almost exactly one month after the FED’s buying of MBS’s ended. Your 401k money extended the firepower, but it all fell apart exactly ONE DAY AFTER tax day, after the 401k money finished flowing. That was the beginning of the end even though there was one more little shot higher to the marginal new high. That marginal high was exactly 100 Dow points. HAH!
Please don’t listen to the majoriy of the assholes on TV. They are simply lemmings without an original thought between them. I know from what I speak… And as far as Peter Schiff is concerned, do your homework before you believe a perma-bull or a perma-bear…
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