Tuesday 9 October 2012

Cash is King now, let us wait for better time

Dear Friends,

As we have mentioned last week, we encouraged all short term traders to cut down on any position size or stay at the sideline as we find out that the market has been sideway or volatile ever since QE3 is announced.

Check out this article:

What really differentiate a good trader and an amateur one is that good trader learn how to preserve capital when the market is not moving or down. Not only is a good trader able to know when to double up when market is good, he need to know when to stop trading when market is directionless. This is the hardest part of trading. Knowing when to STOP TRADING.

These few days to me is a rest from the market. I would keep track of it, but stay away from it. Too volatile with no clear direction for most of the stocks.

But I am always in constant lookout on when the market sentiment turns.

A good indication would be a triple digit gain or a triple day rise. I need to see confidence coming back to the US market. OR else we be throwing money down the drain.

Btw, the reasons for the drop these few days can be attributed to

1) Expectations of poor earnings coming out of US. Wallstreet expect US companies to declare poor earnings results. And you know what, it is because of this decrease in expectations that I think the results might not be as bad as thought! In fact I am getting ready to pounce on the good stocks once this poor market sentiment dies down.

2) Poor performance from Apple these 2 weeks has caused Nasdaq to drop near to 100 points from a high of 3197. This has affected the whole technological sector despite the great performance by a tech rival, Google.

What I am waiting now is to see how the declaration of earnings to affect the market starting from 10 october onwards. These slew of reports will show us the fundamentals of the stocks and possibly put an end to the sideway directionless market. In the meantime, let us stay cash rich and relax!!


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