Friday, 24 August 2012

The first Triple Digit Decrease in Dow in 24 trading days

Dear Friends,

Yesterday marked the first triple digit decrease in Dow Jones for the last 24 trading sessions, which is month than a month. This seems to give the FED a smack in the face after the positive expectations generated 2 days ago.

Like what we previously mentioned, I always pay attention whenever Dow Jones falls by 100 points. There may be a temporarily halt to the powerful rally.

In fact as a trader, I like this pause. Only when Dow Jones pause, it can rise further. This is a pause that will enable us to get on the bus.

My trading strategy would be to watch Dow Jones carefully. For my long term positions, I continue to hold. For my short term positions, I liquidated.

Dow is at 13057 at closing yesterday.

For short term play:

1) Take note these few days: If Dow Jones comes back to 13150 again in these couple of days, that means it has recovered after these 4 straight days fall and might be ready to challenge 13330 high again.

2) If there is a triple digit gain, this may be a signal that Dow Jones has regained a bit of its composure and confidence.

3) If Dow continues to be in the red, let us continue to remain in the sideline.

4) If possible, these few days take note of any stock that did not fall much and hangs there. These may be the stocks you want to invest in when market turns good.

5) Next week Friday, there be a Jackson Hole meeting by the FED, we see if next week the market rebounds with QE3 expectation again.


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