Online Stock Trading | Market action gets wild after FOMC announcement, ends higher on whacky trade

Market action gets wild after FOMC announcement, ends higher on whacky trade


Filed Under Market Commentary |

Mr. Bernanke and company left rates unchanged and positioned themselves to be able to handle a rate cut and a possible bail out of the subprime lenders.  Today’s action from beginning to end was pretty bullish.  We saw the IBD 100 index, an index of leading stocks was up better than 2%, a sign of strength.  Breadth was slanted towards the bullish end while New Lows once again outpaced New Highs.  It does look like we have a short term pop in place for the time being.

What followed in the aftermath at 2:15pm was pure amusement.  The action was quite random, choas followed as stocks pushed indicies to a few different lows only to reverse and hit new highs.  The action was hardly predictable and where it confused many traders.  Case in point about day trading, why invovle yourself with action that less than 1% can achieve success?  Not too mention the stress to be at your desk for tick by tick action.  Is it worth it?

All of this is meaningless unless you have a trading plan.  We aren’t in a market environment where we’ll see stock gains of 1k% or better.  We’re lucky to see 50% gains right now.  I’ve said this before, along with others like Joshua “MauiTrader” Hayes and Brad Koteshwar there are roughly 3 time within a 10year period where stocks erupt for 1k%+ gains.  Now, ISN’T THE TIME!

Here is my trading plan for now.  Look for stocks that show outstanding growth in fundamentals and that are following a known price condsolidation pattern.  Even then, when the stock is on a breakout WE do not go all in.   This is the time to increase the # of holdings in your portfolio, not the time to get concentrated.  We would only do that like in ‘03 and ‘99.

Remember to cut those loses, no need to let them run away from us!

Market Speculator

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Comments

3 Responses to “Market action gets wild after FOMC announcement, ends higher on whacky trade”

  1. Author_Ego on August 8th, 2007 9:11 am

    “This is the time to increase the # of holdings in your portfolio, not the time to get concentrated”

    Thanks for the heads up. This market is not doing anybody any favours. It is fun to watch though, as opposed to, say, the Red Sox.

  2. Market Speculator on August 8th, 2007 1:17 pm

    Can’t stand the Red Sox right now!

    Yes, need to spread the wealth, no need to focus on a handful of stocks!

  3. ZSTOCK on August 8th, 2007 5:21 pm

    took out a short position IWM end of day…i have good reason to beleive IWM fails at it’s 200ma = 79.9, lets hope i have it right.
    zstock.

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