Hello traders and MarketClub members everywhere! If you look back at my very first post for December, titled "December Can Be A Dangerous Month For Traders", you'll understand why these markets are becoming so volatile. Yesterday's announcement, or lack of announcement by the Fed, was all the market needed to reverse course and rally sharply creating the best one day rally for the year for the indices. Not only was it a sharp rally with new buying, but it was a sharp rally fueled by a great deal of short covering.
The questions on every investor's mind has to be, "Is this the Santa Claus rally? Have I missed it and is the rally for real?" In order to answer that question you have to delve deep into the makeup of the market. As many of you know, the Trade Triangles have been neutral and out of the market for intermediate term traders. What that means is that you have no position in the market at the present time. As traders and investors, there are three opportunities to make money in the markets, you can be long the markets and profit when they go up, you can be short the markets and profit when they go down or you can just be out of the market. Staying out of the markets is often times a very smart choice, particularly when the markets are irrational and thinly traded.
Here's an interesting question from Kathy on the Members Blog today: Continue reading "Has The Market Made A U-Turn?"