One hour until Thanksgiving

This is one of the years I'm staying home for the holiday. Almost back to 100% health and even got a flippy 1% trade thanks to the traditional pre-Thanksgiving day runup. Going back to our last post, on that Fri, Nov 20, options expiration, the Dow touched 11-year lows intraday, until in the final hour, the avg staged a massive 500 point rally. On the following Monday, we had a gap open and finished up another 473 points. Call it a bear trap or whatever, on Tuesday, we rose another 70 points and today another 240.

The biggest mover was the financials and if one had the foresight to play the UYG or the FAS you would have gains over 60% in three days. The oils did well through the DIG or ERX and the best performing average was the Russell 2000 through the TNA.

Originally, I was suppose to go shopping for Black Friday, but I decided to stay home at get fully recovered as I might have to trade on the 1pm shortened session for Friday followed by the normal Mon, Dec 1 401k contribution day. I should be through for 2008 by next week and then the work begins anew four weeks later for 2009.

Ironically I've been spending more time Xmas shopping as it seems I picking up habits from some of the ladies of the group. Since gift cards are a big faux pas this year as you never know if the store you get the card from will go bankrupt by the time the gift recepient cashes it in, I was leaning toward things like a quality "down blanket" or stuff for redecorating a bedroom or living room. Let us all be thankful for having a positive year in the markets given what all has occurred, in addition to our families both immediate and nearby, our health, and other commentary that I'll keep confidential. Enjoy Thanksgiving and be ready for work on Fri morning.

YTD +6.9%

The Crash of 2008

Six weeks later and unless you were in cash or were short, 90% of the public has watched their 401ks implode. Back on the close of my last post, the averages were at:

Dow 10831.07
Nasdaq 2069.40
S&P 500 1161.06
Russell 2000 671.59

Now at the close of Nov 19 take a look at what's happened:

Dow 7997.28 (-26%)
Nasdaq 1386.42 (-33%)
S&P 500 806.58 (-30%)
Russell 2000 412.38 (-38%)

On one hand, I am thankful to be up ytd but I'm disappointed I didn't capture some of those moves using the Ultrashort ETFs. The scary thing about this down move which began on September 19 (the day the SEC decided to temporary suspend short selling on financials), is that no more than twenty people in the whole world saw this coming. From Jim Rogers of Rogers Holdings to casy, dana, callie, trisha, angie, audrey, billchang, wally, to Meredith Whitney of Oppenheimer, each predicted and warned everyone what was coming.

Instead of asking, where is the bottom? The better question is, "How should I position myself to take advantage of what's going on today?" In two words, risk management. The most successful daytraders and portfolio managers who are up in 2008 understand both the potential risks and rewards on every trade and do not allow any one single decision place their livelihood in jeopardy.

Anyone can look like a genius in uptrending markets, but the ones who can make profits in downtrending or neutral markets are the ones you should want to learn from.

YTD +5.9%

P.S. Have been a little under the weather since election day, so haven't placed any trades long or short. Interesting enough, I paper traded since then and would have lost about have of this year's gains had I attempted to trade. When you are not 100% focused on the markets, you leave yourself open to distractions that will cost you money.