This is kinda a off topic post but I have mentioned this to some guys in person at meets here and there at meets or other functions (chit chat) over the past few months as the market has risen (since march). I told everyone their would be a chain of events for something, so i wanted to share this. The warning or note of caution I have extended is to switch to more conservative investments during these fall months. Here is the logic, simplified.

A great number of people in the United States have lost their job. First wave happend in the month of Oct 2008 and every month after. A sizable chunk of those people have been on a Employment Insurance (EI) and in most cases this funding runs out after a year. The fear is that as that funding runs out, overall spending will drop as households (middle class) shift their spending strategy to cover the basic needs. Business will suffer due to this drop off in spending and as a result Inventories will raise. In the short run it will make prices cheaper (US market, not factoring currency) but long run the recession can possible be longer than most expect.

Not many Financial Reporters have talked about this theory / approach because it was a theory, but as we get close and closer to this one year point. The market indicators are saying the prospects are not good.

Now I am not those types of people who believe that people should just sell and run for the hills, but instead I think its wise to be conservative with their investments. And keep Cash King (little story)

Last year a few friends who regularly come to me for advise were a little upset that when I told them to sell in 2007 take your profit, they didnt think I was serious. One said, you didnt say Sell, Sell. I thru my hands up in the air and shrug my shoulders. When July 2008 came around and I told the last holds outs that they should Sell Sell. Some did.... But a few didnt. And got crushed... Extra hard. They still came back and said why didnt you say to Really Sell? WTF?

Anyways getting back to what this post is about. I wanted to share some of my basic technical rules for the market. Its good for people who dont really know much about stocks, and trading, and forumla's if your that hardcore. I will not get into any of that here, if your curious about how something looks post it here or PM me.

http://stockcharts.com/h-sc/ui?s=$SP...d=p56484798072 (zoomed out view)

For long term trading you always keep your eye on the 50 (blue) and 200 Exponential moving average. (Green line) To over simplify the model. Think of these lines as a pointing finger when ever the blue cross over the 200 generally its a confirmation of a shift in a stocks direction. It factors in to some degree day to day volatility and gives you a clear head to make decisions that affect a 6 month plus strategy of trading.

Short term trading, which for here and now for the next 2 months or so is more important because this is that one year point of the melt down. If big plays are nervous, radical shifts will happen now.
Now yes the Green is always the most important, but for the short term its importance takes a secondary seat to two faster moving lines. The red 20EMA and the blue 50EMA. Same logic as above, the Red points in a direction, and a crossing of the line generally signals a shift.

Its kinda fun to watch. As a daytrader back in 2002 on the Nasdaq and NYSE, its something you learn and build more advanced styles of trading with. But over time strategies fail, and alot of guys who are disciplined always return to the basics and rebuild a different style. There are Ultra short term rules to this but for now, I will keep it basic, and say that I expect the stock price to fall because of certain indicators. Now as an investors , I watch for my confirmations.

Rules of thumb for any kinda investing or trading is.... The market is right and you are wrong. If you have ever lost money to the market, then you know this. The other is... Stick to your goals and rules of engagement. Everyone can swallow a 10% loss. but holding on till 15% or 30% or 50% is much more painfull.


http://stockcharts.com/h-sc/ui?s=$SP...d=p56484798072
Here is the chart to bookmark. It is a chart of the Overall US Stock market "S&P500" Index (Large Corporations aka Large Cap stocks) A tradeble version of it is Ticker SPY

Feel free to agree, disagree ask questions compare notes what ever, just wanted to mention it to those I spoke to about this months back.

I am going to edit my post soon, i just wanted to fire this off.... busy right now doing something....... :10:00 am

 

i only do currency exchange and speculation. my theory is that no matter how the market goes against you, you still have money in another currency which can be utilized and buy things with, whereas if you're dumb like my dad, invest a ****load and now holds stocks that is practically worthless.

 

Be Smart go with Mutual Funds & let Professional Fund Managers do the work for you. Do your research, they've been doing it longer than you can think, so why try to invent & be a dumbass to lose money w/ out experience.

3 D's
Discipline, Dollar Cost Average, Diversification.

 

^Nice friggin avatar man

 

It is sound advice, unfortunately Fund Managers are not created equal. But again to give you another point, Diversification is key to that aswell.
Ultimately though, it is the individual that is at the end of the day responsible for the investments. It should be everyones goal to learn as much as they can about their money and what their money is doing.
my 2 cents on that

 

Awesome, i have been trading currencies (forex) for 2 yrs but i just stopped recently because of school, and also because ive lost so much money lol. nice too see so many people here that knows how to read and analyze charts.

rontam you're a forex trader as well?

 

lol I have traded 2 million shares of Intel Corp daily in my hay day but I have always been terrified of Forex currency trading. Because yes Technicals are important... but in some ways there are so many uncontrollable factors that can slam a currency one way or another. But from the other guys I know that are into it, its even more addictive than equities. It was just something that I would make money in and then all of a sudden I would get destroyed in a trade where I am still saying what the hell happened.

 

haha, yea its a bit more fast paced. i was a day trader and went in and out several times a day. tried to capture 10-20 pips at a time with a 5:1 leverage.

the biggest problem i have is lack of discipline to stick to my own rules

trading is 20% skill and 80% emotions

 

there goes the market, testing the first line of supports.

http://stockcharts.com/h-sc/ui?s=$SP...d=p56484798072

 

short everything

 

i have a trader thats been trading for me. he's been doing really well, making around 30% returns a month. ill pm you details