DJIM #1, 2009

Wow, we can't believe we are starting our 4th year as DJIMSTOCKS.com with many of you following the markets with us for 6+ years now.   We thank you for your patronage.   It's no secret that many internet stock bloggers come and go as time progresses.    It is either due to the constant changing environments or just a lack of persistency, commitment or consistency in results.    As tough as last year ended,  we can’t forget the first half of the year and commodity rush we had here which included a call on Coals by DJIM #4  week of 2008 and the discovery of stocks like (PCX ANR JRCC MEE CLF ) before they went on to 100% +gains while credit crisis was taking Bear Stearns down just a month later.     We also introduced the Haynesville Shale play  in May before most ever heard of it,  stocks like GDP GMXR HK XCO CRK  all went 100%++  soon after.    Fortunately here at DJIM as we enter our 4th year,  we are every bit passionate about trading now as we were day one and will continue to look for opportunities for all of us to make nice profits in 2009 .    Sure, many traders, including us,  may get discouraged by the poor trading environment from time to time and lack of spectacular trading results.    However,  isn't this what trading is all about?    You win some and you lose some.   There's good times and also bad times.    Going through this trading period like the last few months made our good winning periods that much special and is proof it is best to be ahead of the herd and realize you don‘t need opportunities day in and day out.  We all could have or should have probably just packed it in after the Coals and Shale play periods and called it a year.    There are people who trade to get rich and then there are those who trade to make a living.    For us,  we fall in the latter camp.    Seriously, once you get passed a point where you can live a comfortable life from all the profits accumulated from trading, why still risk it?    Well, we often ask ourselves the same question,  but the answer is always the same.     Nothing else provides us the similar kind of mental and emotional excitement on a daily basis, other than trading!     So, we'll be here for a long long time.

Okay, onto the current trading scene!    Have we started this trading year with a bang or did everyone else think last Friday's action belonged in 2006 instead?     Basically, we had a three day rally that carried us into some unchartered territory.     This is particularly scary.     Okay, for all we know, we may start this new week with some very bullish enthusiasm due to last weeks break of 918 SPX and it could take us to 1k SPX and 10k Dow at least.    Sure,  hypothetically it can happen,  but the odds are still very slim that it will.     This leads us to believe that the recent rally on very very light attendance-volume can only beg sellers to come out and lock in some juicy profit or re-position short.    Why not?   If we were fund managers away on holiday and come back Monday morning,  we'd find a lot of our beaten down positions 20%+ higher than a week ago.     It doesn't take a dummy to know what to do at that point.     Simply put,  what happened during last week's trading should be discarded by the majority as the price action and volume are just not correlated in any way.      We feel many stocks have run up "uncontested"!     It means that many stocks are trading at a level where many sellers would be comfortable selling.   If what we suspect comes to fruition, there will be lack of sufficient bids to keep the market at this level.    Sooner than later, we will pullback.     We are favouring either shorting or staying on the sideline at this point.  One thing we will probably do more of in 2009 is shorting,  we believe we will see SPX go back down to low 800 at some point during the year.

News flow was non existent last week, but it will get busier in the coming week … 2) auto sales for December on Monday, BOE will be making a rate decision,  first central bank meeting of '09 on Thursday, US jobs report for the month of December, retail sales for the month of Dec on Thursday, Madoff scandal review. 

The market is also anticipating lots of Washington in the New Year, including the stimulus package which probably got sidetracked  (in time for inauguration) already this weekend with the withdrawal of the Commerce nomination.   This is the kind of news stuff we don`t want to be wake up to come Monday if overly long. 

Earning season is also about to start and there's no telling how the companies will guide and how investors will react this Q.  It may be different than last Q when everything bad was getting priced in,  it seemed.    We have lots of tension in the Middle East and that's probably causing the oil/gas to get some heavy attention lately, but since when does a war of any magnitude somehow trickle negativity into the market in some form.     Again, we have a lot of facts at our hand and it's up to the market to decide what to do when they get back from holiday tomorrow.     Once the direction is established,  we'd act quick to take advantage of the momentum.     For now, we’d be nervous on any current long trade.