Click on 12631 to learn more about locking in our low rates before prices rise on January 1st, 2012.
http://www.youtube.com/watch?v=7WTsIggw6Hc&list=UU5b-F6jB8Qo178EXPwna1qw&index=1&feature=plcp
Produced & Edited by: @RaginCajun
Directed by: chessNwine
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If you came into this week like I did, you were on watch for the bulls to take advantage of potential bullish setups. In and of itself, that was insufficient reason for me to automatically buy a boatload of stocks and gear up for a Christmas rally. Instead, I was looking to see if the market would actually prove itself first, before adopting any sort of aggression. Clearly, the sell-offs in the earlier part of this week negated that idea, so I was content ride the CRM short I had been already holding for 20 points (I am still short a 1/2 position). Moreover, you can see the benefit of waiting for confirmation, in terms of mitigating risk in not trying to constantly get out in front of the market for a big move. It is very easy to talk the talk, but inside 12631 I must walk the walk as well. Unlike traders/bloggers/authors on other websites, I put it all on the line everyday, and market forces have dictated that there is more demand for me than you. And you know who you are.
As for the current market, you can see what happened on Wednesday and its aftermath below on the stretched out 10-minute chart of the SPY. Note how what amounts to 1225 on the S&P 500 is now resistance, and the market is teetering on breaking down from a bear flag this afternoon. Until price can recapture that level, I see little reason at this point to press any longs here, at least into the weekend. While I may miss out on yet another gap higher on Monday morning, I suspect that in order for the market to sustain an uptrend for longer than half of a day we need to see the constant gaps abate.
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Stocks are finding resistance, once again, at the 1225-1230 area on the S&P 500. Since Wednesday, we have seen that zone provide supply, despite the best efforts of exuberant bulls on these morning gaps higher. If you have been closely following my posts, then you know that I have been largely neutral on the market with an open mind towards both potential long and short setups. My main focus has been on quickly cutting losers instead of going for the big play. I have yet to see much reason to change that posture, although the bulls may finally be able to muster the much-discussed Santa Claus rally if they can get price back above 1225-1230. For now, though, the bulls are not doing it right, quite yet.
From a contrarian perspective, I see more frustration amongst traders than fear or even straight-up negativity at this point. I would not assign too much to that type of sentiment, just yet. When you see “veterans” of the market write blog posts on other websites in condescending tones towards traders who dare to express their thoughts on the market, it reminds me of plenty of old men who thought they had the game of Texas Limit Hold ’em poker mastered, only to helplessly watch me get up from the table on many nights with their chips, and walk over to the cage to cash out. They are frustrated and on tilt, but we may not have seen the whites of their eyes yet.
As I write this, I see the Dow has gone slightly red. I am still in no rush to make a big call here. 2011 has been a year in which I have held heavy cash the overwhelming majority of the time. If you are bankrolled properly, then these are the types of years in the market where your overall discipline and risk management will be your saving grace.
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