Friday, October 31, 2008

Market timing

A valuable lesson in timing the market was demonstrated today. Let me set up the scene.
Markets on an uptrend for a good part of the day. Oils, mining, banks were all strong. Scroll down to my posts starting at 12:04 pm where I sold HES. It was previously a leader in the days up trend. All of a sudden it stopped rising even though some other oils were continuing. That was my signal to bail out and trade it the other way. It also alerted me to a changing sentiment of the overall market. I quickly sold and shorted , or covered and went long my other positions. This turned out to be the daily high. It's another example of thinking contra what the crowd is. Very advantageous fills and a jump start can be had at moments like this. Soon thereafter on one of the chat rooms I was lurking on the bullish comments were still coming fast so I posted its a good time to short with all the bulls around. The market dropped 200 points + in a short time. The GS short was a thing of beauty.
Without sounding like an ass, I sometimes factor in chat room sentiment and do the exact opposite.
The same information is available to all of us but it is the traders that actually recognize what the charts are telling you are the ones making money.
I don't hope and wish and I don't know what a stock will do in the future , but that move was telegraphed to all who were ready to listen, minutes in advance of the actual event.

1 comment:

Blue said...

I saw it too and longed some FXP, but the ETF's just didn't respond.

Can you reply to my previous comment on your previous post when you have time?