Market Monitor

  • Indices are consolidating at this level. There are pockets of very good momentum in the market. The Double Trouble universe and IBD 200 are showing excellent momentum and if you have been trading it last couple of weeks were excellent for returns.
  • Junk starts to rise near correction time. Witnessing beginning of lot of beaten down, heavily shorted, laggard stocks and speculative stocks with bad fundamentals making wild one day moves. The Chinese junk being prime example. Often such action is followed by correction.
  • Such a correction will be healthy for the market. As long as momentum continue to work , one must trade it. The trick is at extreme momentum one must keep one finger on exit button. Some of the best money is made in late momentum phases.
  • When it comes to market direction, your market anticipation skills must align with your trading style. The larger speculator need to move large positions and are constrained by many factors, for small speculators, one of the greatest advantage is small size, which gives you nimbleness. You can easily move 5000 shares position in most stocks in few hours. The large speculator spend enormous time worrying about macro issues and work on hypothesis. While for someone like me making a hypothesis that the earlier correction was garden variety and one must continue to take trades till you see actual top, is much better and above all more profitable strategy.
  • If you have noticed the market is back to where it was in number terms post the one day 277 stocks down 4% move. Will the market break the 600 barrier on 100% plus, is the next thing to watch.

1 comment:

Tim said...

Regarding point #3 - Jesse Livermore stated that the majority of the move occurs in the last 48 hours.