WRONGWAY FELDMAN A WRITER OR AN AVIATOR?
Here is a quote out of an article from the Associated Press I read this morning in the paper. "Investors moved back into stocks on hopes that the Massachusetts Senate race will weaken Democrats and make it harder for President Barack Obama to make changes to health care."
Well..... which is it genius? Did they rally the day of the election prior to the election actually happening anticipating the result, or did they tank today due to the result. This article makes no sense, he/she credits a rally to an event that either had not happened yet or they were reporting exactly the opposite on the market reaction?
This is why you have to disregard the media's daily explanations about price movement in markets. Now, there are cleary exceptions like 9/11 for example where a world tragedy or some dramatic event can drive stock prices. However, for the most part this is just noise. There is a great deal of random movement in the markets, and we just have to accept that no matter how fancy we get with indicators and predictions, the best we can attain is an edge in our favor. At times this can be substantial, but you do not need anything more than a small consistent edge to prosper.
I consistently present things in here that are edges that can be used to make profits. How anyone may or may not use any of these things is unknown. At times I even do a lousy job of using them even though many of them I created myself, go figure.
THIS IS NOT AN EASY BUSINESS
Below is a Weekly chart of Treasury Bonds, a very good bellwhether market. It is my feeling that we are approaching a sell zone for this market, although things are bullish at the moment. Notice how well this market reacted to the commercial buying, and bearish sentiment readings with an instant rally. The red declining line about a point ( 32 32's above where we are now ), is a pretty good resistance zone. You can see just perusing this chart how well these things tend to contain price. We have a flight to quality move going there due to the 2 almost breakdowns saved by the PPT, in stocks in the last week.
What this tells us I think is that we might get some very short term weakness in stocks that will drive this up into the sell zone. Then we will likely find support in stocks. The ensuing stock rally will create selling in Bonds. We saw once again today, that selloffs are going to be very hard pressed to move down very much in this environment. Whoever is in control of this market on this light volume, is having an easy time containing these brief decline threats. As a result, short selling which I have been doing has been treacherous. Every time you think you have something brewing, a "mystery" rally occurs.
The only advice I can give is to stick to your guns. You cannot tailor your trading to this artificial market. It is the most one sided action I have ever seen including the 90's. At least then you could still trade the short side. I will let you be the judge of what is different here I have spoken enough about it. At some point the market will return to a normal state of being and traders will be able to trade both sides once again. In the mean time you just have to keep a shorter leash on shorts, they are very likely to be very brief spurts. There will be one day when a big break will occur, but you cannot tailor what you do to a 1 out of 30 occurence.
I am tempted not to short at all, but just cannot get myself to ignore what are normally good signals. That is an individual call just like most things in this business.