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Wednesday, January 29, 2014

Market in confirmed correction

After yesterday failed attempt run on light volume, today we had a new red day on strong volume confirming that the less resistance path is Down. $QQQ $SPY

Another clue are the bonds index $TLT showing a new uptrend, and forming a cup with handle base with pivot point at 108.8. These shows the money that is "flying to quality".

Yesterday was just a technical bounce to work off the oversold area. Remember that the market will try to fool you all the time to take your money. That is why volume is so important, to keep a heads up on the supply/demand of the general market.

Never try to beat the market unless you want to be slaped in the face. The market is driven by the big corporporations, mutual funds, etc and they will try to create a fake bounce/trap to make you think that the correction is over and then pull the rug from below you. That is why indexes never go straight down as never goes straight up.

In this environment don't be greedy trying to buy anything, you don't need to trade every day. Always when in doubt, stay out. Cash is the king. Preserve your capital to live another day.

I've learned all these tips the hard way, loosing money and making a lot of mistakes. I want to prevent you, the small investor like me, to live another day and in the long term get profits out of the market.

Why I do this? Because I love doing it, I want that the small investor keeps choosing the market to invest his savings instead of banks and big corps access only club. And I force myself to study to write these posts and stay updated, so is a learning tool for me too, so I thank you for that.

Sunday, January 26, 2014

Are we ahead of a correction?

I think so.

Both $SPY and $DIA broke below 10-week line, which I consider a clear picture of a long term support. On the other hand $QQQ are still having some cushion above the 10-week line, but we had many distribution days in the last couple of weeks, which means the big guys are raising money large off the table.

In addition to this, today I was checking my market leader's watchlist and it took me a lot of work to find leaders holding up, several are doing poor advances after breaking out like $FB. Others are being hammered and breaking below 10-week lines, like $DDD $RGR $WX.

Next week we have important earnings announcements coming out, in this uncertainty evironment I strongly suggest not to open any new positions until we have a clear new trend which if we take into account the market leaders past week action the most likely way is DOWN. But as we don't have a crystal ball we'll be waiting patiently on the sidelines. Always remember in this type of situations cash is the king.

Note as well the strong bull market we had since the begining of 2013, we never know but this could be the end of it, but I welcome this corrections because we could find some strong new leaders and fresh new bull runs is where the big bucks are made.

Trade them well this week.

Friday, January 24, 2014

$FB hanging tough after several days consolidating between 55-59.