I have not updated the blog for a while, due to a number of reasons including that I have moved to the opposite side of the world… Since the bottom was reached one year ago the markets have rallied significantly until January 2010. Some people think this has been a Bear market rally and that we will see the low one year ago taken out or at least re-tested. The other camp have a more optimistic outlook believing that the markets will mainly go up from here. There have also been speculations whether the US Dollar will be replaced as the dominant currency of the world together with the US economy being surpassed.
The beauty of being a trader is that it does not really matter which of the scenarios that will play out. As traders we create a roadmap based on the techniques that we use, and then we start listening to what the market is telling us. If the market tells us that we are wrong we will happily change our minds! That is of course easier said than done… Most of us tend to stick to the view that we have formed previously and then base our judgments on that view. I believe that one of the keys to successful trading is to maintain objectivity and always accept that our current view may be wrong, and change accordingly if necessary. Ok, enough trading psychology for now…
These days a lot of traders are looking closely at the index markets (I trade the Mini Dow Jones) as it is the 1 year anniversary since the low following the credit crunch. The Dow Jones index bottomed out on 6 March 2009. As a technical trader I am looking for “pressure dates” where I am on the alert for a change. Now is one of these dates and I allow some time before or after for something to happen, if it happens (6 March is a Saturday this year, so nothing will happen that day). It being the 1 year anniversary is only one of several reasons that I think it is a pressure date.
I have to admit that I am in the Bear camp these days – I think that the top in January will hold for some time, hence I am expecting some more downside in the short term. I am looking for signs in the market to go short. If I find them I’ll jump on, if not I’ll be patient waiting or even go long if the market convinces me to do so…
I have also the view that the US Dollar will go up this year, although we might see some downside in the short term. I will get back to this in another post.
Dow Jones Pressure Date