Thoughts

Well the World seems to be saved. Quite a turnaround hey? I am sure there are many commentators who are voicing how absurd this rally is. I am sure many a Hedge Fund manager is feeling truly beaten as they lift every offer in sight to cover shorts. The simple matter of the fact is, this is always how strong price moves begin. Markets bottom when they fail to penetrate previous lows. The headlines have changed and certainly the magnitude of events appear bigger this time, but the market continues to follow demonstrable patterns. It amazes me how much money is recklessly managed by some who really do not understand market cycles.

Time and time again I have talked about being prepared for a "Double bottom/Test" trade on this blog. Time and time over the past month I have stressed that the opportunity for being short for the big trade is NOT at this juncture. The recent rally has validated this and more. I look back on some of my posts and I am proud. Proud that I have learnt from my experiences. Proud that I was prepared to some degree for these events. I have not made nearly enough money (I am always happy to put my hand up) but certainly I have not been caught on the wrong side of this market. Sure I was bullish a tad early and wrong but that is the beauty of identifying the low risk/high reward trade and pursuing it. The real money is made at these turns.

To quote Paul Tudor Jones: "I develop a low risk idea on the market and pursue it from a low risk standpoint until I have been repeatedly been proven wrong or until I change my viewpoint". I love this. You just have to be willing to sell it when everyone wants it and buy it when no one wants it.

So here are some of my posts of late. This is not to gloat but it was and is my action plan. Pls read these:

http://swingtradersedge.blogspot.com/2011/08/my-experiences-in-2007.html

http://swingtradersedge.blogspot.com/2011_09_07_archive.html (this is probably my most accurate post ever)

http://swingtradersedge.blogspot.com/2011_09_12_archive.html

http://swingtradersedge.blogspot.com/2011_10_05_archive.html (the confirmation of the low)


Where to from here? Asia has bottomed no doubt for at least 2-3months. I will post a number of charts tomorrow. Short term many markets are overbought and now testing the top end of their range e.g. S&P1200/1210, DAX 6000, ASX 4250. I would not be surprised if we did see a short term pullback or consolidation. If u are a short term trader, you can fade away. Bigger picture, any big pullbacks need to be bought. This is the intermediate rally I have been calling for. This should last into the New Year (yup).  Sure our problems have not gone away and nothing has really been fixed. However, we are traders not fund managers.

Good luck out there. Focus on the uptrend

S&P500 Parallel Updated
Remains the greatest chart out there

Austin