Thursday, February 17, 2011

The Daily Note - Today's Market, Yesterday's News

Is this news for you? What's happening today in the markets is already old news to many who direct (read manipulate) the markets politically and monetarly. Long before you're on the scene they have already decided where they want a stock to close for options and for the day. Do they always get their way? Pretty much they do. Their pulpit is the business news stations, the money managers and financial analysts, down to your neighborhood financial advisor who may understand less than you do if you are a daily follower of the markets on line.

Think about it. The multi millions thrown about the daily trading circles are but a drop in the bucket for some manipulators. This is the big arena, the multi billion dollar payout to the winner like in any lotto and it's getting more rich by the day. Who is going to pull the final lever is as good as a guess can be. Yet you and I  both know that when it is pulled, all the cash will pour out of this giant one-armed-bandit.

I know that right now there is a lot of cash pouring in. Be it from people looking for safety in the markets, seeing the economy improving  or from people who feel they've missed out this 2 + year bull ride and want a chance at it, makes not difference.  People are always eager to jump on the ride when it's obviously going their way. Yet I have to put a reminder here about how that was also the case in Feb. 2000, just before March 10th. Of course "bailout",  was not a common word then and neither was "too big to fail" or POMO.
Those three items can change this ballgame, yet nature always tends to win in the end, so being aware and being wary is a good thing.

It is fine to partake in the game as long as you know it's outcome may not be where you expect it to be. If you are just going along with the ride, good for you. Just know the vehicle are you riding in.  Like, we are warned  in California from  time to time:  There's going to be an earthquake;  just don't know where or when.

So being aware of the possibility is step one, but being prepared is the next step for survival:
  • Know where the  the supports and resistances are for the markets not just your positions.
  • Be optimistic with healthy pessimism and be a pessimist with healthy optimism.
  • You're the best judge of your future. 
  •  If it looks right,  take the chance; If it doesn't look good, don't get in;
  • "Hope" is like "Try"; "It is or it is not" just like "you do or you do not". 
  • Admit you're wrong then take action. 
  • Check your baskets and stir them frequently. Back burners can burn your cash just as easily as the front ones. ( the cooks out there know this well, do you?)
  • Do not overextend yourself or your trading capital.
  • Be liquid. Have cash at the ready in case of a freeze. 

Presently, there is a feeling of victory throughout the world as an American supported dictator falls off their perch, yet again.  While the celebration continues, there is also a continual state of upheaval fueled by it throughout the Middle East.  Do not presume the outcome, because  most reality falls a far cry from the news and, I doubt that this will be different. Don't just take comments as face value, investigate history.

Be aware and be wary that in the world, as in the markets, there is a lot of sleight of hand going on and not much will surprise you.

Happy Trading, Living and Dancing

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