How high can we go?
As I sit and look at the market at the time of this blog I see the Dow is up just over 10907 and the S&P is @ 1173.27, and Nasdaq at 2410.69.
I like to pride myself on being an optimistic investor and trader and want to stay positive and say things like: “It’s all going to be ok”, or “Just hang in there it will work out for you”.
The frustrating part of that is that as optimistic as you can be we still have to go with the facts and trust the indicators and the technicals to help us with the overall mood and direction of the market. That being said I can’t sit here and tell you how high or how low the market will go. I wish and I am sure we all wish that we could do that. Trading would be easy if we could right?
What I can tell you is my own opinion, and my own thoughts of what it is we are seeing in the market right now. Make sure you understand me when I say this that its simply my own opinion and thought process and that its up to you as individuals to do your own research and studying to find out how plausible or far fetched my opinions are. That’s the whole point of the blog is that I get to vent and share my ideas right? Yes. So let me vent.
So I have been looking at the charts of a variety of companies and mostly on the market in general to get a feel for the overall trend. I must say that my observation is that the market is in a severely over bought position and is poised to have a sudden and steep pull back or consolidation in its current bullish trend. It may be obvious to you that I like to focus more on the technicals than I do the fundamentals but even those seem to be shabby at best with the numbers. All I see that’s good with the fundamentals is the companies thought and future outlooks are becoming more and more optimistic as they feel the market is done with the recession and that we are free and clear to move on forward and up in this economy. I don’t see that. I feel and it seems to be coming around more and more these days that the worst is yet to come. This is not meant to be a depressing blog or a doom and gloom article. It’s simply designed to have all of you sit back and take a good hard look at the numbers and the charts to make sure they line up with what you have been taught.
Are you sticking with the basics? Are you following all the simple methodologies that your coaches have taught you about? Are you playing it safe with your trades or simply rushing into them because someone told you too?
In this day and age we all have experienced some kind of a set back in our investments. Whether it’s in the stock market or through loved ones it always tends to seem like we got cheated or we did something wrong. Just not the case. We need to learn from our mistakes and learn from others as well. We need to learn that a strong market does not always last. We need to learn that when investors buy, buy, buy without any logical reason as to the future value of the company is going to cost them. We need to trust the charts and make our investing decisions with as little emotion as possible.
As you look at the charts and a variety of indicators you will see that what I speak is true. The charts are showing an overbought situation. Do you really want to take the risk when it shows that? Not on the buy side I hope. Most of you reading this should now know that there are ways to make money when the market falls, or goes down. If you don’t then you need to learn. This is a fundamental strategy for every good investor to know. It’s not any more risky than trading when the market goes up. It just needs to be something that is learned and applied to understand it better. My Elective Class on Calls and Puts that I teach on a regular basis can, and will teach that too you. If you have not attended this class then you want to register for it and replay it as often as you want till you understand how it works. I can even answer your questions in that class. It’s a free class and there is no reason you should not know how to trade in a falling market.
Again I can’t predict the future. It may be several weeks or even months before the market starts to go back down. But rest assured it will. It has too. It’s only healthy for the market to do so. But don’t be surprised if when it does start a downtrend that it may even be harder and farther then the last one we had. That’s not good for your retirement accounts. But there are alternatives. That will have to be another blog for me to share some good accounts for that purpose.
So to sum this up for you. Always be on the side of learning. Never settle for all the information you currently posses. There is much more to learn out there. Be diligent in understanding how the market moves and place your trades accordingly. Be prepared for a correction and take advantage of it. Be prepared for after the pull back is done to take advantage of it when it goes back up again. Review your manuals, your classes, and your notes. Its time to take responsibility for your investments and make sound decisions.
We can work more with you one on one also if that is your desire. I can even open up my schedule more to accommodate all those who want to learn about the market in a personalized setting.
Feel free to contact me by email if you like. jwillis@prospering.com
Hope to see you soon. Happy Trading
Josh Willis
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