Today is Tuesday, November 17th and the rally stays alive on Wall Street.
The Dow was up 30 points and closed at the high-end of its range for the day, a good sign for tomorrow. The close of each day is really very important when you look at the big picture and are reading price action. A couple of weeks ago, I showed a video of daily data and how the close on some of those days gave a clue about a pending market reversal.
Well, it is nice to see it close at the high-end of the range. It is no guarantee but it sends a message to the “Steet” that the buyers at the end of today, have confidence that tomorrows open will be higher and they want to position themselves to take advantage of what they think is the next market move.
The Nasdaq was up about 6 points and the S&P 1 or 2 points. So the rally is across the board. I did just check the adv/dec line for today, and it looks like the declines did outpace the advances by around 300 issues. That is not usually a good sign, but don’t draw your complete conclusion on that. Those that are looking for an excuse to sell short this rally will definitely be looking at that and saying, “see, see that……” and so on. The price tells all.
If the news is good the rest of the week, the buyers may not be able to help themselves and may start shopping, lets hope so. Keeping the rally alive, is good for everyone, God knows our country has problems and traders know too. If we can get over the hump as I have talked about the last couple of days, it could set the stage for an extension to the good times.
November is typically a very good month for the market, December too. The traders and investors need a break this year, I can only imagine if we don’t crack and break the current momentum, all of the heated debates about the economy and politic’s over the Thanksgiving Holiday. WoW. It will sure give everyone something to talk about.
I am going to try and start posting earlier than I have. I went back and read yesterdays posting and I saw 4 type o’s. Not cool. I have been posting late and I am sure I was pretty tired, so, lets see if I can follow through?
Yesterday, I briefly talked about always having your stop in at the time of order entry. Let me go over that a little more.
When you place an order, there is no way any trader is going to expect his account to survive if he does not know at what point he is going to get out. That is plan and simple. If there are readers of my blog, that do that, let me kindly and gently encourage you to always place a stop at the very millisecond your order goes off. Most trading software will have a feature like that. If you place and order and then go and click on your stop price, maybe as you have always done, eventually, and it may not come for a while still, but anyone who has been trading for any length of time, will tell you, that you are going to get burned.
It only takes one time, to mess you up. You may have forgotten or not even aware of a Federal Reserve interest rate cut or increase and just at the moment you place your order, long or short, the market moves away from you so fast and far, you freeze as you see that you are down 10 points in seconds. The next few moments are critical, you need only do one thing, hit the close button and go flat immediately. If you rationalize the move and say, it will come back, maybe it will and maybe it won’t. How are you going to feel when you see yourself down 20 points and you only had intention of risking 6 ticks on the trade.
It could happen and I only tell you because I was one of those guys that it did happen to. This happened a long time ago but I never forgot it. I was shocked to see my position move like it had wings, in a blink of an eye, I was down 10 points. I rationalized it and waited and was down another 5 points, waited and now hoped and down another 3 points, inside of just minutes the position was down 20 points and I could not take it any more and closed it out.
I learned a valuable lesson that day, NEVER TRADE WITHOUT A STOP IN PLACE, IMMEDIATELY ON ORDER ENTRY.
The day that this happened, it never came back and in fact dropped another 15 points to close at the low for the day. When you find yourself wishing, hoping, praying, you know you are in trouble and doing those things are not going to help you. So, for those who say, they don’t like putting a stop on right away, they don’t want to get stopped out by giving away their position.
That is not a good reason, in fact I don’t know of any good reason for not having a stop order in place at the time of order entry. Getting wiped out, is what the novice does, not having a stop in place is what the gun slinger type trader does, neither will be expected to last very long. In fact “Wall Street” feeds on these people like those little small orange fish you see at the pet stores, in fact they call them “Feeders”. Don’t be a feeder, become a feedee….
I just made up a new word, I don’t think it will be in Websters anytime soon, but do you see my point. You need to do the right things as a matter of habit and not as a feeling. So that’s it for now.
Last thing: My website updates should be done this week. Those new people who may be following me, look for the updated pricing. It is much more affordable for those wanting to get started.
Good Trading to All !
http://www.screencast.com/t/ZTY1NTY4N2Qt Today’s equity curve
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- Stock Market Still Showing Strength
Tags: market sentiment
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