Stocks and Trading 2009

By Chuck Anthony

If you watch the markets as closely as I do, you no doubt have noticed the somewhat precarious developments on both economic and financial fronts lately. Certainly these headlines dominate news cycles every night -- as if to imply some kind of doomsday scenaio looming. As an avid Squidoo fan, the redundancy in these headlines even inspired me to publish a lens called The Bear Market Daily News. But more importantly, current market conditions being what they are, it begs the question: Just exactly how does one trade in these extraordinary volatile times?

Well, for starters seasoned traders expect, even embrace volatility, it being part of the game. But by the same token, if you're new to the Market, don't even think about trading until you get educated. That being said, you should be aware that the old 'buy and hold' approach is pretty much dead in the water right now. I mean, if you want to watch a guy like Cramer purely for entertainment value, that's fine and I certainly mean no disrespect. In fact, I'll say he was worth his salt as an investment guru back in the day. All I'm saying is maybe it's time for a different way to approach the market.

With that, I'm happy to inform you that recently heard about one of the trading community's true visionary mentors. I am most impressed because not only does he bring 30+ years of trading experience into the fray, he thankfully has taken the time to produce some very cutting edge stock trading material. I'm referring to Bill Poulos, founder of Profits Run. He quite literally will help you shut out the 'bad news media' and get you tuning in to 'good news technicals'. Anyway, I'll put it to you another way; I like the trading plan over the TV man.

By Chuck Anthony

*** Latest TARP Video Update from Don Harrold http://www.youtube.com/watch?v=EiUEzlzmL-w

The mighty Dow took a bow today, Tuesday, February 10th in honor of our new Treasury Secretary, Tim Geithner and his roll-out of what I call, TARP 2 - The Sequal. By the end of the trading day the Dow shed 382 points. Now I hate to be cynical, but do these guys in Washington even have a clue? I can only assume they believe only a small percentage of Americans are really paying attention. I'm quire sure that investors are indeed listening. That's because uncertainty in the Markets almost always has a bearish outcome. Well, it surely did today.

The problem of course, was the lack of clarity in Geithner's pitch. The analysts like to say, "The Devil's in the details", but today the leadership sounded more like, "Yeah, were working on it.", To me this equates to window dressing for the new administration; giving the general public something to cling to. I'm of the opinion that we investors need to hear something more substantive such as, 1.) How will those toxic assets will be dealt with? And 2.) What is the actual proposed timeline for the stimulus to work? Otherwise, I fear the Market will languish at levels we've become accustomed to and worse, experience new lows this year.

Oh, and that old 'buy and hold' strategy from days gone by? Let's face it, that's a distant memory at least for now. The sooner investors get on board with trend trading, the better.

It must be my optimistic point of view and a hightened self-interest in the marke that drive my thinking of late; volatile markets and all... at least in terms of where this market is heading.

A couple of weeks ago for example, as Dow and S&P charts looked like a waterfall, the steepest decline since the Great Depression mind you. We observed a couple things that happened: first fear, then selling-frenzy panic. Now we hear that Warren Buffet is buying stocks and adding to his personal portfolio. That being said, the investor gurus are taking notice.

Does that mean the market has bottomed?

Well, as of this writing, October 18, 2008, the S&P Index rallied to $940.55 yesterday without sinking to 800 this week. Looks to me like the beginnings of a "U Bottom" forming when viewed on a one-year chart. In any event, if the gurus are correct, they'll look like a geniuses, I suppose.

Another word to the wise has to do with market timing and caution. This is where technical trading comes in handy and can help to protect your portfolio. Lately I have been in lengthy discussions with my trading partners and we all seem to agree, that a 'buy & hold' strategies have definitely fallen out of favor with investors. We have to be nimble traders -- quick, alert and resourceful enough to know our next move in these extreme market conditions. Just as fear (volatility) can induce panic in the worst of a Bear Market, so can optimism become euphoric in front of the next Bull Market; whenever that should happen.

Bottom line; trade wisely.

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