Thursday, February 15, 2007
Uh-oh Another Blow-Up
Things were going very well this year until today. My trading was awful today and I've probably lost the profits I made this month so far and a little more. I need to use stops more and be prepared to get out of a losing position fast. Bernanke's testimony to Congress caused the market to melt-up when I was very short. The model was, in fact, pretty ambiguous on the direction today. Some signals pointing one way and some the other. I need to learn to take a small position or a hedged position in those circumstances and then really get out fast if the market is determined to go against me. If each "blow-up" gets less than the last one then I guess I am making progress.
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6 comments:
hi there Moom, hey this may be off topic but what's your take on this bull run at a macro level? Nikkei breaking records, US Indexes breaking records (or almost)? Just curious what others think... I am trying to better understand what's behind it.
Investors are optimistic that the world economy will continue to grow at a moderate pace without strong inflation. The legendary soft-landing. They are betting this is 1985 or 1995 and not 2001 or 1990 etc. So central banks won't have to raise interest rates either. Growth, plus low inflation and stable interest rates is all good for stocks. On top of that stocks are not particularly overvalued compared to the late 1990s-2000. This is because profits are at record levels as a share of GDP. I have been thinking the market will correct signficantly but looking at all the data any recession would not be that severe. And the correction would be a 20% or so affair in the S&P 500 which would only take us back to a little below the May 2006 low. But that is just speculation.
Wow. 20% is probably the largest correction prediction that I've heard. That's big stuff.
20% is the standard definition for a bear market. This is one of the longest rallies without a 20% correction in history. A 20% correction should come some time.
Moom, I think you mean a 2% correction, not a 20% correction. I have been reading that S&P 500 is overdue for a 2% correction....that it's been since last summer and that that's the longest record it's ever had...
No, I mean 20%. 2% would be a good start.
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