Lessons

1. If VIX is under 26, buy the dip. If VIX is over 26, sell the rip.

2. Always trade in the direction of the larger trend. Find the strongest trend in your time period.

3. Nothing as bearish as a failed breakout. Nothing as bullish as a failed break down.

4. Don't worry about the last dollar. Take your money and go to the beach!

5. No more than four positions at a time. Preferably 2-4. Scope out others. Pick the strongest.

6. Buy the strongest; sell (short) the weakest.

7. Nothing is guaranteed. Nothing.

Friday, April 13, 2012

Two Possibilities

There are two possibilities in my mind:

1) We go down another 3-5% in the indices and then go up for 3-6 months. 50% probability

2) We go straight up from Monday. 50% probability

I am invested for Option 2, but am saving a little dry powder in case of option 1.

2 comments:

alexnewbee2 said...

could not here be a third one, we have seen the top already? and now only down..

Win said...

This is a correction in a bull market. Globally things are changing, we will be welcoming a secular LT bull market soon, and people steeped in the bear bias that paid well for much of the last 12 years will have a hard time. Unless we have a nuclear disaster some some such event, I do not see this correction extending further than another 3-4 %. Look at any daily/weekly chart -- BKX, $BSE, FXI, SPX, DAX, TNX, etc. You'll see a strong bull trend, and support fairly close by. In SPX, it's another twenty points down. We will have a summer to remember.