Hope you longs sold before the sell off.  It's all downhill from here.

I haven't seen the news yet.  What caused the selloff?  I'm still bullish, just a lot more cautious.  That was an intense crash.

Combination of a few things caused the crash after the Fed's announcement. 

 

1) Profit taking

2) Short selling

3) Economic conditions

4) Lack of a reason for the rally to continue.  Buying volume has been very low lately.

 

There doesn't really even need to be a reason....just like there wasn't a reason for the big rally which occurred on April 1st.  You want to make sure you trade in the same direction as the psychological change in the market.

Does it make sense to be long and short at the same time when the market direction is uncertain?  i.e. have some stocks that you are bullish on, and have some other stocks that you are short... ?

Did I miss something? Stocks were down today,. but only mildly

both of my current holds are up

 

RichDad:

Does it make sense to be long and short at the same time when the market direction is uncertain?  i.e. have some stocks that you are bullish on, and have some other stocks that you are short... ?

 

Nothing wrong with that......goal is to fatten your wallet.  If your trades are in line with that goal then your trades are correct.

DracMonster:

Did I miss something? Stocks were down today,. but only mildly

 

Go back to sleep.  We will wake you in a couple of years after this bear market is over.

 

Sorry, that was a little rude.  How about the gravestone candle on the dow or the inverted hammers on the SP 500 and Nasdaq 100?  Also, take a look at the bullish chart of the $VIX.

 

Today the Fed delivered as promised.  They cut rates by 25 basis points and pointed toward a pause in cuts.  Now bulls are confused about what to do next.  The market/economy has been getting supported by a weaker dollar.  The Fed is now finished trashing the dollar for now.  What is there left to support this bull rally?  NOT MUCH. 

jackg1606:

Today the Fed delivered as promised.  They cut rates by 25 basis points and pointed toward a pause in cuts.  Now bulls are confused about what to do next.  The market/economy has been getting supported by a weaker dollar.  The Fed is now finished trashing the dollar for now.  What is there left to support this bull rally?  NOT MUCH. 

The same thing as for the last year or so, the power of self dellusion. The fed seems content to make the absolute worst moves and hope that things work out. Which is to say terribly disconcerting to those that are paying attention.

That being said the idea of not having long positions because of a near certain tumble in equities is really bad advice. What one should be doing is evaluating the shares in question and weeding out only those companies that are facing long term or permanent destruction of value. Unless you've got a way of knowing when the top 10 or so days are going to be, you're seriously risking your returns by sitting out. It's far better to invest in solid companies that are going to weather the coming storm.

I rode out the previous bubble collapse by doing absolutely nothing, and was left with a massive gain, far larger than I would have had under typical circumstances. Had I sold out when things looked bad, I would have had an anemic return at best.

That being said, I whole heartedly agree with you that a strategy that enriches ones wallet is hard to argue with.

You bears may have won the battle, but you have not won the war! In the long run, bulls always win.

jackg1606:

DracMonster:

Did I miss something? Stocks were down today,. but only mildly

 

Go back to sleep.  We will wake you in a couple of years after this bear market is over.

 

Sorry, that was a little rude.  How about the gravestone candle on the dow or the inverted hammers on the SP 500 and Nasdaq 100?  Also, take a look at the bullish chart of the $VIX.

 

Today the Fed delivered as promised.  They cut rates by 25 basis points and pointed toward a pause in cuts.  Now bulls are confused about what to do next.  The market/economy has been getting supported by a weaker dollar.  The Fed is now finished trashing the dollar for now.  What is there left to support this bull rally?  NOT MUCH. 

 

Here this should give you an idea on the most profitable months historically.  This is just a guide and you will have to look for the signals.

 

Below should give you an idea on the more bullish months with attempts to beat the market. Note more important is to look at the average return over time.  As you can see April is one of the more bullish months and May alot less historically.  You could reasonably expect for S&P 500 sensitive stocks to follow this trend.

 

Historic Monthly Market Returns S&P500(1950-2007)

Jan. 36 up years; 22 down years; avg. return = 1.25%<---can we say post Christmas people still happy
Feb. 32 up years; 26 down years; avg. return = -0.15%
Mar. 37 up years; 21 down years; avg. return = 0.87%
Apr. 38 up years; 20 down years; avg. return = 1.19%<---can we say spring break/tax refunds people happy again
May 33 up years; 25 down years; avg. return = 0.24%
Jun. 31 up years; 27 down years; avg. return = 0.14%
Jul. 31 up years; 27 down years; avg. return = 0.67%
Aug. 33 up years; 25 down years; avg. return = -0.12
Sep. 25 up years; 33 down years; avg. return = -0.70%
Oct. 36 up years; 22 down years; avg. return = 0.80%
Nov. 39 up years; 19 down years; avg. return = 1.49%<---can we say black friday tons of sales happy people
Dec. 43 up years; 15 down years; avg. return = 1.56%<---can we say Christmas rally happy people

 

I like stuff like this as there are no "ifs" about this information very objective.  Hmmm wonder when the next major rally could be.  Really hardcore folks will have maps alot more intense than this.

aussie:

You bears may have won the battle, but you have not won the war! In the long run, bulls always win.

And if you switch hats you can win as a bear and a bull.

Quote I found on another board.....thought I'd share.......


What will cause this market to continue to rally????


lower unemployment? nope, looks like it will move north instead

higher home values? nope, looks like the trend south will continue in to 2009

higher profits? nope, most companies will post lower eps or higher losses

lower gas prices? nope, looks like gas could hit 4-5 a gallon this summer

lower taxes? nope, most candidates want to raise them

a stronger dollar? nope, the dollar will be range bound to weaker this summer

faster home sales? nope, they are selling at a slower pace at higher discounts

less foreclosed homes? nope, all time high for defaults last quarter, soon to become all time high foreclosed numbers this quarter

lower inflation? nope, it will only grow hotter

higher wages? nope, the top dollar jobs are being cut

a fed cut? nope, looks like those days are done and would only make matters worst if they did shave another 1/4 point

dreams, hopes and prayers? yes, that is about all the bulls have left