Wednesday, January 27, 2010

On the Sixth Day of Painmas

Well, there goes 2010.

 Profits completely wiped out.  Losses now growing.  Sitting through a correction is a bad idea.

 What I did wrong:  I quickly added to declining positions instead of observing that a major shift was taking place.  Had I simply kept my 25% cash position alone for a few days, I could have added at much much better prices instead of being helpless today when finally, some actual bullish, bottoming signals showed up for a variety of stocks.

 In a correction, trendlines will definitely be tested and violated.  It's best to let the first wave get crushed by the fear than enter headlong.  This was a huge learning experience in impatience and stubborn belief.  When the markets want to correct... the entire world of technical analysis changes.  Stocks don't just bounce... they fall fast until exhaustion.

 Some of the signs of a bottom (if this is indeed a bottom -- it probably isn't ) are:  strong buying vol. intraday.  You can clearly see the green bars showing buyers are coming back in.  Dragonfly/hammer candles form at old support levels.   A glimmer of hope from the msg. boards.  I added way too early and now I am 100% helpless should the markets continue to correct lower.

 Should I survive... I will remember these six days forever.

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