An End To A Very Volatile Week

The stock market indexes basically were unchanged up .8% to down .6%. The mixed day showed the changing of leadership that we are currently going through.

The old leaders-Homebuilders, Oil, REIT, and Metals-mainly reside in the NYSE and are your old Dow type stocks. The up and coming leaders hail from the Internet, Software, Commercial Services, and HMO sector, with most of these stocks trading on the Nasdaq (not all of course, but most). This sector rotation is obvious when we look at the index of the DOW and NYSE which have both failed the follow-through day from Wednesday. They still have not undercut the lows of the short-term rally but failing the follow-through day is very negative for these indexes which house the old leaders.

The good news is the Nasdaq and SP 600 are still holding up from their Wednesday follow-through. And these indexes are offering up the fresh breakouts in the above mentioned new industry leaders. This to me is very positive for a Jim Cramer tech rally into next year. If it happens great, if it does not happen just make sure you have a disciplined cut loss strategy. That way you can live to fight another day if this rally doesnt work out. But not being positioned in the leaders as they breakout because you don't "trust" this market is the silly rationalization that cause many investors to underperform in their portfolio.

I will take my long signals and run with them until they dont work. If this rally fails I will be happy, if it succeeds I will be happy. Why? If prices go lower that will clear out more of the "weak traders" and help create a stronger bottom to help launch the BIG winners. If we go higher now I make money NOW. I can't be bearish on any market that moves up no matter how "smart" I think I am.

Which brings me to my last point. No matter how YOU think the economy is doing, it doesn't matter at all. What you or I think is meaningless and will NOT help you make money. Only reality can make you money. And reality lies in the charts and fundamentals. If both are great and you think the market should crash. Well guess what I will enjoy making money while you cry about how the stock should not be moving higher.

After being a lurker in chat rooms for over ten years I can tell you one thing: There is never a loss for "know-it-alls" that never ever make money but offer opinions all the time. Don't these people have anything better to do? I guess not. Maybe they are just like me and addicted to one of the greatest professions on Earth. Or maybe they made their millions and now would like me to have it. Either way, bring them on more and more. The more that play the higher my pay.

Have a great weekend and I wish you great luck and continued success in the upcoming weeks.


New Swing Longs: RHI SAY CAMD SGR LEXR IINT RNWK CTXS GORX

Swing Longs Outperforming Market: SUPX MESA SMSC TEVA BTUI BRLC FLO WIRE MACR MTN

Small Stocks On Radar: PV BRN TRT KNAP MFW

New Swing Shorts: None. I am sick of destroying my returns trying to play this side. I don't know how well people can possibly be doing in this market on the short side, unless you are in oil stocks. All my gains in all my shorts the past two months have been given back in a matter of ONE WEEK! That is trading my friends. All those homebuilder and REIT short gains I made have been given back thanks to overtrading the past week on the short side. Ten years later, here I am making the same mistakes I made when I started. Funny thing is 50 yrs from now, if I am still alive, I will make these same mistakes. Why?? Because we are working with REAL MONEY. By default that will cause you to make completely ignorant decisions even when you know you should not.

Shorts Outperforming Market: None. I give up on this side, for now. I will wait for a full blown "obvious" recession to hit us before I visit this side again. OK. So I probably will not wait that long. But from now on the whole sector needs to be breaking before I dabble as "hard" as I did with these terrible short trades the past week.

I thought I would never say this, but if it wasnt for my ability to make consistent money playing poker I dont think I would have a pay check to show for the whole month. One thing is for certain: I will be ending the month of October with a loss from over trading. Hey that is my style. Every once in a while you go through this. It happened last year for a couple of months and October is no different to me this year.

Thank God for Poker! ! ! !