Tuesday, April 21, 2009

Market Trend Guide

I have been pretty on-point as per following the trend of the markets the past two months, and I think its time I start sharing my positions. My positions last anywhere from a few days to a few weeks. I rarely enter and exit on the same day, and I prefer to scale into my entries and scale out of my exits. That being said, I am not afraid to make a move when necessary.

I am still learning more about some technical trading tips, but most of my direction comes from an overarching fundamental knowledge - which directs the general trend of the market - and some fledgling technical analysis - which is directing my shorter-term moves.

In general I believe we are in the midst of a deep and enduring bear market. I see now such "V-shaped" recovery in sight. The problems that are being worked out go way deeper than any recession we have experienced in the last 70 years. The truth is we began this big bear in 2000, and the intermediate bull-era was a full fledged credit induced hysteria, that is only going to make our fall into the abyss longer and more protracted. If you are thinking about investing for your retirement, for your child's education, or any other long-term purpose, please wait. PLEASE WAIT! This market will take years to recover for any long-term purpose. Investing in equities now will be akin to leaving your money under a mattress for 5 years (a mattress will dollar-eating bed bugs). Invest in bonds, CD's, or pay down your debt, but please do not put long-term money into equities for at least 2 years.

That being said, in the interest of making some money now, it will take some more active investment. You will have to willing to cut your losses quickly and change your position. You will have to short the market some times, and be ready to long in others. Just know that we are in volatile times (a sure sign of a bear market) and buy-and-hold strategies are dead.

So for the last six weeks we have been running up with a nice bear market rally, there have only been two other times that the market has been up 6 weeks in a row, each followed by healthy pullback correction weeks. I still think that this little bull has a way to run, but we are going to have to catch our breath a little from the last few weeks. Prepare yourself for the pullback this week, and then another last gasp of the dying bulls.

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