Thoughts and an Earnings Trade

A lot of range in the averages on Wednesday. While I was incorrect on Tue being an up day, I was nearly accurate on today's move with the Dow coming down to its 30 day moving average (the intraday low was less than 3 points away), before it reversed and rallied almost 100 points before closing with a loss of 20 on the day. I bought a 200 share block of AKS at the close and they have an earnings release either on Mon the 22nd at the close or Tue the 23rd before the bell. While I'm disheartened to hear that most of today's move in the steel sector was because of STLD raising next year's guidance, I wanted to put something in the market rather than have excess cash. While earning 4.25% waiting for trades is nice money during range bound or downtrending markets, you don't want to have too much cash when other sectors such as China are making 5-15% daily gains.

Speaking of China, here's where a business school lesson "stick to U.S. based companies", HURT my performance for 2007. While I made a few trades on these China plays, the correct play was to hold at worse one of the index etfs such as FXI. Even the index is sitting at a 79% gain since August. For 2008, when you see something that moves, look at the chart and keep your personal bias out of the analysis. Jim Rogers was right. 80% of the move on a potential winner will occur when you least expect it. If you let your industry or personal bias affect your analysis, you could either end up missing out on a big winner or underperforming a benchmark average.