Market is taking off
Posted by Frugal on June 21st, 2006
My last night’s worry in reply to Novice’s question seems to have dissolved, at least temporarily. Today’s rally with Nasdaq leading the way is a better rally. Usually rallying in Dow Jones is the least significant, although the most highly watched. And no doubt, that precious metal follows together with the general market. Did you get your shares?
Beyond the 40% that I purchased since last week, this week, I’ve added just a little bit. I haven’t calculated the percentage, but it’s probably going to be some 10% more. In another word, I still have 50% readily available cash that I didn’t dare to put it in before seeing the confirmation of the bottom. Although gold has just rallied to $590, that still doesn’t rule out a retest of probably $570 level. I may be looking towards finishing my purchase if the general market acts rather well, and also the precious metal pulls back to $570/$575 area. I wouldn’t bet on a retest all the way down to $550. Remember that the 200 days moving average of spot gold price is rising about $0.5 everyday. So in another two weeks, the 200 days moving average (MA) will be at probably $550 to $555. Assuming that the bull market continues, 200 MA should not be broken, and a complete retest is not guaranteed. Therefore, you should raise your target to maybe $560 or higher if you want in at a pullback (if it happens).
I will still suggest not putting everything in before the Fed meeting. There is never a guarantee in the stock market. Depending on how aggressive you are, you can use your own weighting. Whether it’s 50% pre-meeting, and 50% post-meeting, or 70% pre-meeting, and 30% post-meeting, whatever that works best for your stomach. I myself probably prefer a mix of 70% to 80% pre-meeting, assuming that the coast is semi-clear now.
Good luck trading. As I have always learned, when I’m in doubt, I make smaller sells or buys, but don’t do all or nothing. Timing the market is simply asking for trouble. If you do a little bit here and there, maybe you’re not completely right, but at least you’re not completely wrong. Although that sounds very stupid, it is actually very healthy for your trading mentality. Because you’re not totally wrong either way, you can stay in more calm, and make a better decision afterwards when things start to turn against you. Then you won’t be into buying panic, nor into selling panic. It’s really for your mind, not for your wallet. But what’s good for your mind will be good for your wallet.
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June 22nd, 2006 at 12:16 am
No, I didn’t get my shares. So much for a dip. I’ve got much to learn.
June 22nd, 2006 at 12:48 am
Check out
http://www.1stmillionat33.com/2006/06/pm-market-update/
http://www.1stmillionat33.com/2006/06/pm-market-game-plan-for-next-week/
I recommended getting in at a higher price. And only 25% chance we would get a W dip. Now I don’t know whether the current rally is sustainable. I assigned a 20% chance for big rally, and 55% for tight range. Today’s price so far is only 3% more in XAU, and 4.5% more in HUI compared to last Friday’s closing price. Given the volatility of PM, I may still consider that PM is trading within a range. So far, the chance of a deep dip is slim. But I still won’t rule it out.
Obviously, the difference between you & me is that I’ve put in 50% of my cash, while you have not. This is the mental calm that I’m talking. If you try to catch the absolute bottom, you actually may end up chasing the market when you don’t get anything at the bottom.
I will be taking a wait-and-see attitude. I am not in a hurry to buy into market now, but selectively, I may put in 10% here or there. I will probably put in more, even at a higher price than today’s if I think the market is solid. But of course, I will prefer a pull-back.
Many stuffs about the stock trading you can’t learn it from books or websites. You simply need to lose some money or opportunity here and there, and learn from the real world experience. And if you can learn it from a one-time experience, you’re superb. Most people keep repeating the same mistakes over and over, because they never learned about the reactions between themselves versus market (especially emotionally).
Good luck.
February 27th, 2008 at 2:34 pm
Dont know if I’m in the correct place to post this. Has anyone ever used selling puts or calls with the high dividend stocks you own? That should put a few extra $$ in your pocket. appreciate your site.
February 27th, 2008 at 2:34 pm
Dont know if I’m in the correct place to post this. Has anyone ever used selling puts or calls with the high dividend stocks you own? That should put a few extra $$ in your pocket. appreciate your site.