Horrible Market Conditions For Position Traders

by Olivier on July 27, 2011

Nothing new to report on. I am starting to sound repetitive, I know. Then again, I am just writing about the markets and what I see. Sometimes there is not much to write about. That is obviously very difficult to sell. But it’s an integral part of trading. Sometimes market conditions are not conducive for a specific trading style or trading personality. If that’s the case, the best thing to is to do nothing. I am following roughly 300 websites and do extensive additional reading. What I have noticed is that many out there are actually recommending to sit out tough or sideways market conditions. My point is: They recommend doing so but still most continue to trade ignoring their own advice.

If you review my current portfolio positions note on my public list it reads: 03/10/11 – 100% CASH. In the meantime I did a whopping 3 trades that I didn’t publish. That’s it. Now if you take the price level the S&P 500 traded at when I went to cash you come up with 129 as measured by the SPY ETF. Today, almost 5 months later the SPY is trading at 130.60. As you all know, I am a position trader at heart. Looking back, going to cash and staying in cash was the best thing I could possibly do. Granted, hindsight is always 20/20. The point I want to drive home though is an important one:

Have the courage to do nothing and sit on your hands if market conditions are not right.

There is no such thing as the ‘right’ or ‘wrong’ approach to trading. Your job as a market participant is to figure out exactly what type of person you are, what kind of trading personality you have and then figure out the time frame, holding period and trading style that best suits your personality. Forget about everything you read on the Internet for a moment. Then reflect upon what this game is all about. In my opinion it is the following:

Trading is YOU against YOURSELF.

There you have it. Know who you are, do your own thinking and always strive to be an independent trader.

That being said, reviewing my charts after today’s action I can only come up with the following conclusion: I don’t like anything out there. I don’t want to go long and I don’t want to go short either. This makes me think about the various headlines I could have chosen for tonight’s post. Here’s a few that come to mind:

  • Churn and burn
  • The party is over
  • Nasdaq 100 trapping bulls
  • The sideways trading range continues

You get the picture.

A few quick market thoughts:

Mike sent me this nice quote before I left in June. Thanks!

The real voyage of discovery consists not in seeking new landscapes, but in having new eyes. – Marcel Proust

My public list with all my charts can be viewed here:

Buenas noches!

{ 3 trackbacks }

Comments on this entry are closed.

Previous post:

Next post: