Tuesday, February 10, 2009


I closed out all my existing positions yesterday morning and didn't trade at all after that. The reason is because I know what the 50-day MA can do and how it can waste a trader's time, energy, and in many cases, result in losses and potentially perpetuate a death spiral. We closed at 869.89, or .24 pts above the 50-day MA (869.65). This was highly expected.

You just don't mess with the 50-day MA because it acts as a "magnet" on an intra-day level. If you noticed yesterday, the entire day zigzagged above and below the 50-day MA, eventually returning to the mean. This showed extreme struggle between the bulls and bears. This is usually because of a pending news item. The end result is that the day becomes a doji, or an indecision day. I even mentioned yesterday (mid-day) that the day was going to be a doji and that it wasn't worth my time or energy to trade.

Not only that, the market is presently bound by the 30-day MA, located at 862.09. This is in addition to the 860-880 channel that I've mentioned many times already. Notice how we kept bouncing off of 860? There are too many support/resistance levels that are keeping this market in such a tight range. In fact, I picked a nice time to take a temporary break from trading to mentally refresh. As long as we're in the 860-880 range, I will not be trading. As long as we're lolligagging around the 30/50-day MA's, I will not be trading.

I am very interested in seeing how the market will react in the morning. Currently in 100% cash and avoiding all the government fuckery.

WARNING: Extremely Offensive

A new feature, The Guy from Boston! (Also extremely offensive)

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Bob said...

Would you give us some cliff notes and your thoughts on the book you are reading?

John C. Lee said...

I will actually do that because the book is that good.

Bob said...

Much appreciated!