Online Stock Trading | Rumor hits the street, cools a HOT day in stocks

Rumor hits the street, cools a HOT day in stocks


Filed Under Market Commentary |

Rumor

Stocks soared for the better part of the day yesterday as earnings out of CSCO helped boost morale at the NASDAQ.  With technology leading the way stocks were poised to finish the session on the highs.  Sometime after 2pm rumors of GS after-market negative news, spread like wild fire from trading desk to desk.  Fear of a sub-prime credit crunch is still fresh in the minds of traders.  Goldman Sachs was quick to squash the rumor and stocks reversed hard but well off their highs.

Although this is not the market to be going all in on stocks, it is certainly one that we can make money off of.  One thing to keep in mind, other than cutting losses is how important position sizing here is.  Money management skills in this market environment is paramount.  Since we aren’t going to have many stocks making BIG money we’ll certainly have a few that will make 100% gains.  So long as we continue this uptrend. 

I would continue to keep new buys small and would not be shorting here.  The number of shorts in this market is staggering and the risk of upside surprise is VERY large.  You do not want to get caught in a short squeeze in this market at all.

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