Thursday, November 6, 2008

Take The Money and Run

So this is it we are in a trading range and it has played out well the last several weeks just as I predicted last month. Another big selloff in the market on Thursday which ended near the low 900s. After a 10% down move in two days, on relatively light volume by the way, I gotta start to look for some kind of stabilization in the markets going into Friday or at least next week. Friday is a wild card however because we have the dreaded jobs report due out pre-market. My opinion is that the market has priced a terrible number the last few days so if we get anything reasonably close to the expected 200k jobs lost in Oct then we could actually rally into the weekend. I'm not too sure we see a number like that though. If we get more like 275-300k jobs lost then watch out for a nasty day Friday where we could even get down to the 880 level or lower. But like I said we are down 10% in two days, markets snap back to their averages and we are a bit overextended in the short term so a small bounce or even rally could transpire.

Bottom line is we are stuck in a range for the foreseeable future (850-1000 on SPX). The way to play a range is to buy when we hit the floor (keeping a tight stop underneath) and selling when we hit the ceiling (keeping a tight stop above). When the market gives you the money, take the money and run as Mr. Steve Miller once said. Don't get greedy, don't get fearful; because the market doesn't care about what you want, so you will lose your shirt if you play this market, or any market for that matter, with your emotions. So don't! And of course always obey your stops traders.

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