PUZZLED!!

Today is about the strangest day I have seen in my 1+ years of studying the market. The Dow is up 20+ points, but EVERYTHING I study is down!!!! This has totally thrown me for a loop. I know the Job/Employment report came out, but normally most stocks follow the direction of the Dow- especially if the Dow is over 20 points. The only thing I can think of is this election along with reports unpredictable reports have this market responding very different.

Rookie

Just my opinion but I think it may very well be people selling short, which is a position of placing your money thinking the market will go down. Selling short in my opinion is confusing and risky. What some traders do then is you are agreeing to sell to the agent or broker the stock at the current price even though you do not own the stock. When the stock starts to fall you buy the stock and take them to the broker who agreed to buy the stock from you at the first price you “borrowed” the stock at. Yes I know it sounds weird but it follows along to a similar idea with Gary’s Widow and Orphans or Printing press.
BTW You can’t do this if the stock is already falling. And you better have enough money in your account to buy the stock.This is NOT easy to do which is why I don’t do it. Also it is risky and expensive. I do not gamble. I trade.

For us who do mainly options do this.....if you have been watching a stock and you are scratching your head thinking “Why in the heck is that going up when there is no reason and most indications point to down?” You may have a candidate for upcoming Puts.

Next time you see a stock rising on no news or bad news watch and see if it doesn’t fall within the next week or so. (Facebook comes to mind here) Write it down in a notebook and see if it doesn’t materialize.

So at this present time watch the S&P. Use the index’s your stock is in and do not rely on the Dow.



Edited 1 time(s). Last edit at 10/08/2012 10:08AM by Darcy.

Darcy,

Wow, that has put so much in perspective and makes perfect sense. I have been reading and prayed that something would be revealed to me. I have been in a this fog. My confidence had starting slowly going down. I was not having bad trades because I have not been trading anything. I do not gamble either, so I was going to sit and try to figure this thing out. Honestly, I do not know if I would have ever come up with a logical reason for why the market was showing this extreme inconsistency.

Unfortunately, I do not know anyone who will make the complete sacrifice to do this. Well, there are people who want something for nothing and will try this for free. They can look in another direction for handouts. I have started to understand why Gary was so direct and seemed almost angry when people look for handouts. The amount of time, effort and money it takes to "get this", is extreme. It takes special people to do this successfully. My wife tried going through class, but stopped after 2 weeks of studying. She is a masters level teacher and now feels trading is the most mind boggling, complicated process she has ever attempted. She totally respects my dedication to the Gary's teaching. I also thinks she feels I am "sick in the head" for studying, reading, listening to CNBC, writing in my journal, doing news plays, etc. I laugh at her and simply say, "You either love this or you hate it".

Thanks again Darcy!

Rookie

Rookie,

My thoughts on the different indexes.

Each index represents different types of stocks and so a different outlook on the market. In general, the Dow contains the larger companies and is generally seen as the more conservative index, while the Nasdaq, containing mostly tech is more of a risk on type of trade. I always look to see which index performs best and worst during a given time frame. If the the Dow is outperforming, it generally means that traders are cautious and making more conservative trades, while if the Nasdaq and/or Russell are outperforming, traders are more willing to try riskier types of trades.

Candis

Candis,

Thanks you very much. I traded puts on Amazon today and did very well. I will place more emphasis on the Nasdaq because most of the stocks I study are in that index. Today gave me some hope because I clearly saw indicators that pointed in the direction of a trade on puts.

I am still not holding any positions overnight. I am not confident that it will go in my direction in After Hours. The big money is still waiting, but the big boys are coming to invest. I will wait til things are a little more comfortable before I hold a position over night.

Thanks again.

I have studied and practiced AAPL throughout my year of training. It has been a great stock to practice because it MOVES!!! I am very familar with it, so I tried to dive in and out as I did during training. AAPL is not hard to snipe (small bricks) off small charts. I bought 2 Call Contracts on Apple at about 2:30 and sold at about 3:30. I did not buy out in time (could not afford buying 1 month out). I knew I would be out today- PERIOD! I picked up about 3 bucks in that 1 hour. I cleared a little more than $300 (real money). I used the 21 for my action and decision. Why did I feel confident? The Broad Market had been slowly moving up all day, but AAPL was down. NASDAQ, S and P and Russell was up. My charts started to turn over along with the stocks I study. Apple was moving through my 50-Day MA on the 21. Had a Fat Pitch and MACD pierced my line going up. I felt confident that it would move up at least $2. The momentum was strong. Although it was risky, I had experience whith this stock moving exactly like it did today.

Apple is very expensive, but I know the stock very well. The great thing about this stock is, for the most part, it is going to move a lot everyday. The bad thing about it is, charts are very tricky with this stock. Charts indicate one thing, but it does something totally different. The key is, you MUST establish solid support and resistance lines before and after entering the trade. It MUST go in your direction immediately after entering the trade. I draw a support line $1 dollar below the price of the stock and a resistance line $2 above. If my support line is broken, I am immediately out. Since short term indicators are showing promise, I watch closely, anticipating my resistance line being broken. Once the resistance is broken, it acts as support (as taught). I establish another resistance line. If it starts to slow, sit realatively stagnant, or start to bounce around my support line, I AM OUT!

By practicing nearly 40 trades every week, I learned how some stocks move. I do not practice as much now, but I tried to follow Gary's rules to the best of my ability. The one year of training has been valuable!!!!!

Rookie