Monday, January 22, 2007

Long Overdue Update and the Nasty Nasdaq

A subscription service that I use and have had lots of success with issued a Nasdaq exit signal last Thursday. The exit signal was generated based on a number of distribution days within a 15 trading day period. Last time a sell signal was issued was May 10. I have circled both days in red on the chart above. I have been bearish since middle December, and went into the new year holding long QID (short the Q's). It looks like I might have been a bit early. I am not looking to get aggresively short yet, as I feel the Naz may bounce around in a range between 2475 and 2400. If 2400 is broken, I will establish some initial positions. Similarly, I will look to get more aggresively long if we trade above 2475.

I feel it is serendipitous that the recent market action is a hard market to make money in because for the past week or so I really have not felt like trading. Not only have I not found any setups that have really excited me, I think I just need a break. I did 30.26% last year, and it wasn't made very easily. I think now is a good time to relax a bit, work on refining my strategies, and wait for the market to establish a new trend. Furthermore, my wife and I are in the market for a new home (great time to buy folks) and that is taking up a lot of my time and energy. Did I mention I have two young children? Not like any of this makes a difference, but I felt like I might need to explain my recent absence to my 1.3 readers.

The one trade I put on late last week, a short of GES, was stopped out for a tiny loss. Of course had my stop been 3 pennies higher I would not have been stopped out and could have captured todays gains. I finished out last week about breakeven for the year so far, so I am really not feeling compelled to trade as I don't have any major losses to make up, and there is a lot of time left in 07 for huge gains.

I made one trade today, a 200 share short of ALL at $63.36 I will continue to nibble here and there with small positions until the market either corrects or breaks out of its range.

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