A little bit of luck?

 10-13-08 4pm QUICK UPDATE :

MARKET IS UP A RIDICULOUS AMOUNT AND  I WILL BE SELLING EVERYTHING AT THE CLOSE.

We hit the target in one day 9387. A great baby trader call indeed. Moved into cash at the close. A monster trad percentage wise.

It was almost like winning the NYS Lottery. I guess I had my buddy, A Little bit of Luck on my side. I thought the entire prediction from Tuesday was quite accurate.I shall let the judge decide if the play was good. Anyways, I bought in using margin and established 8 positions based on dollar cost averages of $500 per symbol. Normally I would suggest 1/3 positions going in, but I am using money that I can afford to lose. When the market opened I executed market orders across the board and did not worry about timing the bottom. Here are the entry points. Notice the volume on the QQQQ. It was 2.5 times the daily which is a great indicator for a short term bottom.

Here is where all the stocks closed on Friday night 10-10-08

Every position is in the money, and I am in these trades for a rebound to approx 9300 on the INDU. The reason for this number is simple. Every time the INDU has had a massive collapse or capitulation such as on Friday, it pulls off a rally of approx 18% from the low point. The low was 7882, 18% of this is 1418 which brings the sum to 9300. Not need to over think this play. Just buy and hold. Yes the market can go lower, yes more negative news can affect the conditions. These are the risks of the market. 

Here are the other risks that will cost you. Never take advice from the flock. The flock loves AAPL, RIMM, and GOOG. They think these are godly stocks. They are the ones that will KO you every time. These are the people that end up going to share holder meetings in order to have their free therapy as they watch the stocks fall out of bed to levels they can't understand.

Never buy a stock that shows up on your radar due to volume increase, hot news, or an analyst upgrade. You must find 3-4 sectors that you have a passion about. I follow semi chips, video cards, video game makers and box makers. These are the only sectors I trade period. If you watch your basket of sectors every day you will be rewarded. These stocks become your children. You know when they are happy due to volume spikes in the 1st hour or trading, you know when they are sick immediately. You can simply look at them and you just know, almost innate. So you have the upper hand on the risk reward just based upon this aspect. When your stock becomes a hot stock due to new or earnings, all the sheep that see it pop up on the most active list and the news wires are about to step onto your playing field. Now you have home field advantage. That is how baby trader plays the game. This is the biggest game of mind chess in the world. Never go for the homerun and  never go off your home court, The best players in baseball get into the hall of fame for 2 reasons, base hits and averages,  rarely homeruns. If they are hitting homeruns, then they are using steroids.

So while I am not bullish on the market, I would like to see this dead cat bounce rally up to the 9300 on the INDU. Then I will move back to the sidelines and await the signals from the flock on how to play the next inning. Please share the blog with someone. I takes 5 seconds to leave a comment. These posting take me away from time with my daddy. A comment or feedback is critical if I am to continue forward with this blog. Thanks for reading and remember Sheep are very bad.