July 1, 2013 – Market has Changed Significantly, Have You?

Note: All opinions are mine alone and does not reflect views on any company I work for.  

Key Strategies:

1.) It’s important to note that the market type has changed significantly since May 22 (US Fed Bernanke first whispered the word “taper” to the markets)

We have moved from strong bull to strong bear very quickly and is now at the borderline with neutral territory.

From 5,678, we have travelled exactly 881 points in just 4 days making a short term high at 6559.98, almost the same level last June 19, 2013.  For the short term time frames, we have actually reached a sell level prompting the disciplined trader to raise a lot of cash and sell, opting to buy on a pullback in the next coming days.  You are not a fund manager who has a one year or two year time frame, so if the market has changed significantly, so should you.

Inline image 1

Alternatively, the market can also find its support at 6,115 to 6,244 shown below:

psei 07-01-13

2.) In addition, market volatility moved from quiet to normal and its current trend is heading toward more volatility.

This is becoming a range bound market; it is not a time for “buy and pray” investors.   If you are active in the market, you need to know what you are doing or you could be one of those people who might be saying “I wish I had known that back in 2013.”

Be prepared to protect yourself.

Most importantly, make sure you are clear.

Renowned trading psychologist Van Tharp said it best:

“This is a time for neither fear nor greed. For those who are sharp and well trained, this could be a time for tremendous profits. “

 Remember – the selling part is a ZONE not a price.  The buying part is a ZONE as well, not one price.
P.S. Also all casino stocks in our oversold filters (MCP and BLOOM have unwound their oversold levels after rallying 30% and 13.6% respectively) – while the likelihood of rallying is still possible, we are expecting clients to be nimble in this volatile market.
-Faceless Trader
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