August's next to last trading day the S & P has been up only ONCE in the last 12 years. We'll see if history repeats itself; it has not done so once this month so far.
We'll end the week with some stock projections we'll be sharing with www.bluechipoptions.com Preferred Subscribers, as a part of your learning experience for how we trade most everything we have in life.
Supply and demand. Cause and effect. That's all it is.
With a proper consolidation, 9250 or lower, I personally will feel there is rational to the market, and not manipulation. If this type of sell off takes place, I will feel less of the GREED that overtakes us right now, as the market hit new highs.
From there, I'm with Harry Dent, not Roubini, and I can see a short term move in this market to Fibonnaci tops of 10,400, to 10,700.
Last year at Blue Chip Options we began selling our stock portfolio, core and speculative, at Dow 14,100. Following our rules we sold 1/3 of our positions. At Dow 11,100 we sold another 1/3, all still profitable trades.
Then, we let it "run". Our remaining one third of core and speculative stocks fell to new lows, and we began buying again at 7400, and made more buys at 6500. We did not add any new stocks, but only increased our holdings in our existing positions. Preferred Blue Chip subscribers can see our portfolio live, but we're making very good money.
We then trade index options, OEX here, and DIA options over at Blue Chip, and we trade other options that we would normally invest in the stocks in.
Here's an example: I like McDonalds (MCD) and it's underperforming. I figured out how much money I would invest in the stock, and thusly with stop loss, how much I was willing to lose on the investment.
I used the stop loss money (what I would have been willing to lose) and am investing in a LEAP option on McD, allowing two buys. I'll hold it long term, and be hopeful to double my money or more, or lose it all, as I had been willing to lose it anyway.
These are some of the ways I use Floydian logic to control emotions in trading.
I never sell at the top. Always leave money on the table.
I always sell when I can make some money, especially in volatile times.
All of these lessons are exactly how to "think" to trade the OEX, or bananas, or anything you are distributing.
You might review my thinking on trading as the art of selling fruit: http://www.oexoptions.com/pages/fruit.html
So, we've sold no stocks yet. There could be new highs. Just a bit of sanity to the market would make me feel a great deal like a bull market was truly emerging. It simply all seems too soon to me.
