Wednesday, May 30, 2007
We continue to operate under the hypothesis that the market is forming a head and shoulders top. Prices moved up to resistance yesterday, and should be contained roughly near yesterday's close. We scanned the market very thoroughly and we had a very difficult time finding anything worth trading. In the past when we had a difficult time finding good trades the market has tended to be in quiet distribution mode, enticing traders to buy or even sell short, only to stop them out on pure market noise (meaningless volatility). As such, keep your order sizes small here and don't be aggressive. Wait for the right price to come to you, don't chase because you are worried about missing a trade. This is very important advice to heed in a tough market like the one we are in right now.