Written by A.J. Brown

Decision Time: Are You In or Out?

Team, we have a serious decision to make right here and right now.

The charts are telling us that a few investors are speaking loudly. That means most investors are sitting on the sidelines just waiting for something tangible to spur them into action. Those few investors who ARE in the market are speaking loudly.

And I don’t need to tell you they are a wild bunch. They are trading up, down, and sideways because they’re following all the news headlines ans speculation that goes with them. And so the market is bouncing up and down like a rubber ball.

On a side note, we know what to think about news headlines, right?

News headlines come from the media. The media, first and foremost, are interested in ratings and readership. They are far more concerned with entertaining and titillating us than they are with providing us with anything useful or accurate.

Which is why we don’t trust news and we don’t trade based on the news.

But the few investors who are actively trading the markets ARE following the news media, coming up with conclusions based on what they see and hear, and then start movements. They’re placing trades based on their dose of daily news.  Other investors who are just itching for a move, are jumping on board.  It’s like the blind leading the blind.

We, on the other hand, must make sure we follow the charts no matter what we do. Charts don’t lie.

So, the decision we’re facing is: Do we follow the “crazy traders” or not?

Obviously, following this wild bunch requires different strategies than we would normally use. The strategies we might normally use are telling us to stay out — and sit on the sidelines with all the other “wait and see” traders.

Many gurus’ systems are telling us to stay out. Their motive is to keep us from losing money. Heck, for the last year the IBD Can-Slim method has been telling us to be in all cash.

Let’s assume for a moment we decide to enter the market alongside the unpredictable and erratic traders. The strategies we would use to trade in such a market are reactive in nature and best handled by some degree of automation.

Many have said, “A.J. are you now condoning day trading?”

Not by my definition. I don’t sit in front of the computer all day watching the markets and trading.

Instead, I set condition alerts the night before on possible entries and exits. I have the alerts go simultaneously to my email inbox and cell phone. When I get an alert, I trade. When I don’t get an alert, I’m doing other things — not watching the market.  I usually spend no more than one hour in front of the computer on a busy trading day.  Usually less than 20 minutes.

So which is it for you? Are you in or out?

There is no single “right” answer. Everybody’s individual situation is unique.

The worst thing to do is to try to trade using the trading strategies that are applicable to normal market conditions. First, you will get frustrated that the strategies are telling you to stay out. Second, if you do enter the market based on those strategies, you’ll probably wind up losing either because you’re ignoring their messages to stay out OR you just aren’t familiar enough with them to hear their caution and beware messages. Nothing adds insult to injury like being frustrated and losing money. Not fun!

If you decide to trade the current market, make sure you’re using reactive non-emotional strategies designed for the current “manic market.”

Best regards always,

A.J. Brown

4 Responses to “Decision Time: Are You In or Out?”

  1. gerard @ 1:52 pm:

    During this period when automobile top managers asking for astronomical amounts for bailouts and, it looks that they will get it, the markets goes up! Then a a few days later they ask for more funding because they apparently screwed up in their estimating, and the market takes a dive. As far as I am concerned, I am staying out of this mess until such time that those in charge are making sense!!! And all this does not only apply to the automobile industry but also the Fanny Mays etc.

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  2. William Comer @ 1:59 pm:

    Sorry…but apparently I’m not getting your message here, AJ. I am in, of course. But, somehow I anticipated some commentary on HOW to be in, some specifics. I am in, of course I am….I am impatient to have some mentoring on HOW to be in. Opportunities are ALWAYS now! How do I trade the opportunities as the market presents them NOW.

    That is what I anticipated would come out of this blog when I saw the email in my inbox.

    For instance, here is a specific prospect–I love getting to specifics and away from generalities. One can’t trade generalities, one can’t perform due diligence and tech analysis on generalities. ASIA…either APR12.5C (.EUJDV) or APR10C (.EUJDB).

    If this is an interactive community, I haven’t found the doorway yet. I welcome team consideration of this trade prospect, for instance. healing_current@yahoo.com.

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  3. RichE @ 2:34 pm:

    Sounds like day-trading to me. Welcome to the club. It’s nice going home each day flat.

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  4. wayne @ 7:48 pm:

    A.J., If your signals are telling you to stay out then sit it out a bird in the hand is worth two in the bush. Thanks for sending me e-mail Thanks again Wayne

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