Monday, October 16, 2006
We would like to make two points today. First, don't forget where the indices are. Those betting on a large upside breakout at these levels are betting on the greater fool theory; that there will be an even greater fool to buy at higher prices. Keep cool here even if (especially if) the market goes into a panicked buying mode. Second, just because resistance is overhead and indices are not likely to make much progress, trade what is in front of you. If set ups are good, take them and protect yourself with a good stop loss strategy. Right now set ups are very good. Yes prices may turn at any time, but no one made any progress in the market worrying about what "could" happen. You have to take the opportunities that the market gives you and protect yourself against the turns by using good risk management.