Your Personal Trader - DJIM Journal 2H'-2010

Today’s trade can only be filed under the “great escapes” category. It wasn’t just a matter off digestion and tired buyers, it was all the overnight-premarket headlines hurting every sector of leadership potential. We'll leave the question marks up on Great Escapes(??) for now.

Financials- Washington sticking their paws on the banks once again, saying hey pals we want more!.

Techs- SOX <4% had a ‘SALE’ sticker on it all day. A few earnings AMC may help tomorrow.

China- Newsflow of ’ broader’ policy tightening that threw off most of the stocks DJIM follows off their lofty levels. If we like the 10% up days on these high beta stocks, we have to be accustomed to these prices going the other way from time to time. The important factor here is not to get caught on what could be multi consecutive ‘RED’ days starting where all your recent gains will evaporate. Only way you do this is take this high beta region for what it is and ‘trade it’ as we discussed in a forum post recently. Also, you need to know/ realize the time of headlines, if you wake up and see SHANG up about 2%, it doesn`t mean China stocks will be green. This policy tightening news hit AMC and you'll see this in the Asia markets overnight.

Commodity linked stocks- AA’s downbeat report pressured and China tightening monetary policy noise played a role here as well as demand would be hurt, most likely.

Simply, the ‘tiredness’ bolded in Journal after Monday’s action compounded into more profit taking due to headwinds. As a trader, you need to recognize the potential for more selling pressure from headwind newsflow upon an already ‘tired’ buyer market. One + One = 2!. This way you take profits early in the day before other traders catch on to the signals. Activity still is void of short sellers as upside risk of ‘09 is on the mind, the fact we held and bounced some suggests there is still an underlying bid on weakness, thus this is just profit taking so far.

Until, the SALE signs are removed from the windows, we'll continue to just window shop for "individual stock" trades until this market becomes attractive once again to enter in size and more than just a few positions.