Monday, November 19, 2012

What Was That?

This question is on the minds of many shorts who could not get out of the way in the last two trading sessions. Some of my followers are probably new to trading and have absolutely no idea what happened on Friday and today. Nothing new happened!! Stock market moves the money from the accounts of those who do not know how to keep it to the accounts of the ones who know how to take it away. This is the basis on which stock market is built. If you are not sure what I am talking about, it is time to get educated, and do it before involving any more money in this game. I say this kindly, respectfully, but very assertively.

On Friday S&P 500 almost reached my first target of 1340, missing it by three points. I told you to "not get greedy and take what market gives you". Market has been trading very orderly, with beautiful setups and amazing respect to technicals. The picture has not been muddied by this two-day melt-up. Oversold bounce was expected and should be treated as a short-covering rally to sell into. Pick your spots to reshort wisely!

Let's get one thing straight. We have seen this before - politicians promising to avert the crisis. They calmed the worries down, put out the fire, and skipped town before reaching the deal. Ah, memories of TARP and Debt Ceiling come to mind. This time will not be any different, I say. The on-and-off-again nature of Fiscal Cliff deal negotiations will rattle the market like earthquake aftershocks. The most important thing you have to know is that the earthquake has already happened, all you have to do is prepare yourself for the aftershocks. They eventually come, without exception.

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