I have to admit I still have that nagging feeling that there is a very big drop out there somewhere, but I just don't know where or when it is coming. I do know that we are in a downtrend at the moment, so selling rallies is the correct play. Maybe one of the moves down in the direction of the trend will be a big one, I just have no idea. However, I just can't shake this feeling, I wish I could. One thing that I will say though is that I will not trade off it in any way shape or form. It is just a gut feeling at this point, nothing more.
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Wednesday, August 18, 2010
TAPPING MY FINGERS ON THE TABLE
I am certainly not inherently a patient person but am trying to be right here. I think this market is setting up for another leg down here and want to get short this sucker. However, it is just not quite right yet, so I am hoping we hold up for another day or two. I love Friday selloffs, so maybe we can hold up today or tommorrow and set up a Friday entry. Of course there is no way we can ever know exactly what will happen, I do know that if we move across or up slightly, I will be looking for an entry here. If we explode up or roll over, there will be no trade for me.
So there you have it. I always say we can never know the future, we can only know what we will do if certain things happen. As a result, that is my plan and I will stick by it. We are at a time with a strong seasonal tendency for a decline as you can see on the seasonal average that I have displayed. Seasonals are not perfect. As you can see we have by and large followed the typical seasonal pattern, but there have been periods where we have veered away from it by quite a bit. I have always loved seasonals ,yet I for the most part do not consult them when making trades. I do though like to look for trades at key seasonal times during the year, and this is one of them for stocks just as October is on the bullish side.
The tendency for interest rates to decline from now through the end of the year is most likely the reason why there is that seasonal upward bias in stocks in October. Politicians often want to keep things being stimulated through interest rates especially when elections are on the horizon. It helps keep them in power. This year might be different in that we are probably closer to an overthrow of the government literally by the irate citizens than we are to an endorsement of what they are doing via election results. This fall is going to be very interesting on several fronts.