May 18, 2006
Traders responding like FEMA - Time to let your gameplan work.
This is the fear and selloff I was expecting and just this morning posted that you need to follow gold and overseas markets more than ever . Don't be fooled by our futures anymore. I am now a little nervous. Today is a great day to read my market BLOGROLL.
I am taking a little confort in the fact that rates just collapsed today and that is a further sign of fear in the equity markets.
I am watching the bull market stocks - OIL, METALS, Russia (TRF), India etc.. drop 20-40 percent the last 4 trading days. This is where I am fishing. If Gold has indeed had it's climactic run, my stops are now very close so I like the risk/reward.
I started nibbling on gold stocks at the close and will be selling some puts for a trade tomorrow (do not follow my lead - this is not advice).
I have long ago posted that Biotech and selected other high beta stocks were breaking long uptrends. They are really underwater these days. No dollars go here for me.
Any breakout trend stock that I have recently purchased has been whacked back into its base. My list of ideas is so narrow that I only need to focus on GOLD, OIL and selected other leaders so I am excited and focused.
Money management will save me and it is very important now if you are probing. In fast markets you need a plan. Can't wing it or your hard earned gains disappear in a few bad trades.
Although the markets are down a fraction of yesterday, the price moves today in individual stocks played catch-up. I expect more of the same as we get closer to a trade.
For the record, I was stopped out of some Apple yesterday and the stock looks broken. Really, the stock does not look buyable though the Company continues to execute. This happens all the time and there is nothing I can do about it.
Adjusting the stock trend following system of my buddies Cole and Eric at Blackstar with my own tolerance for risk and satisfactory money management has helped me sidestep this mess in the money that I am managing. I know that Eric and Cole have been working on a futures hedging overlay and I am interested to see how that would have dampened the volatility and losses of this huge selloff.
I have reviewed the last 4 months of posts and have been pretty bullish until last Friday, so I feel good about the position and the course my blog is headed. My case study of creating this diary and posting my market thoughts has really helped me. The blogroll that I have tirelessly worked on is a moneymaking machine of brains and insight. I hope that it has brought a few laughs and lessons so far as well. Continued thanks for all the links the last few months.