Love-Hate Relationship

August 6, 2011

This is looking like a love-hate relationship between investors and the market. Just the other day, the US Market dived 400 points and today, with good news on the jobs front, the session was still volatile but the market summoned the strength to go into positive territory and ended up 60+ points.

We don’t “need to be right” , remember? For every trade, explaining what happens will be difficult. However, take note of the major issues here which influences the market.

Jobs – this is a must-have for every part of any economy. When people have jobs, they have income to buy all sorts of stuff, they feel secure enough to borrow which in turn further strengthen the economy with companies selling more “high value” products like cars and homes. For businesses, this means expansion or simply being able to remain alive. Todays news reported a jump in Jobs created 117,000 from previous month 46,000. Yayyyyyyyyyyy! That’s HUGE.
Debt issue -you might say debt is old news, though it still casts its shadow into the market. Recent Italy is hitting the headlines. (And because Italy and many other debt-ridden countries are included in the European Union, the effect is quite huge.) Expect this issue to be in fashion. Animal-prints anyone?

With these two issues the prospect for the market is not too rosy, dampening “investor sentiment” or the feeling of investors that they can make sure profits.

Sweet Treats - Binky's Cakes (link below)

So why are investors / traders going out just to get back in? One could be the price level, if it looks like the price dropped so low (as it had been moving down for days), it could be a “bargain” and may yield big profits if the move down reverses. Some of the price levels were not seen till 6 months ago, so it may be able to satisfy profit target rules. One is BHP, the biggest miner in the world, demand is still high from rapidly industrializing countries, they just reported their production and profits are very healthy. Price level was at $38 versus year high of $49 – if your 1R is $3, it could reach the target $9, since the range is $11. That’s a sweet treat!

However, if you don’t like the ups and downs,,, and as in relationships, prefer stability and predictability, you might be single (or out of action) for long in these times. What to do now? Remember, Cinderella, can’t go dancing with only one shoe. It is a good idea to look at another system or concept (like band trading) you can use that makes money in volatile market. Yeah, additional work but hey, you got to know how to profit from the situation, so get moving girlfriend!

(There’s something wrong with my system’s uploading of pics, have to reuse this picture.)