Good stuff,
I’m glad you stated your position in this post. Regarding the “coin flip” as to whether the market will decline or rebound…. aren’t we likely to get some more bad news soon (employment)? Isn’t it likely that Europe will continue to scare investors and we’ll see very light trading with the 4th of July next week? It seems far more likely that downward pressure will prevail. Your thoughts? Obviously, we can go up or we can go down…. but what will make us go up? Housing starts? better than expected jobless claims? Angela Merkel!!!???
My philosophy regarding the markets is people drive price moves, not news. The news is not nearly as important as traders reaction to the news. Sometimes bad news can trigger a rally and good news pushes us lower. This is why I focus far more on what other traders are doing than any impending headline. As I stated in previous posts, I expect us to head to the lower end of the trading range before bouncing higher. I have a fairly large short position with a fair amount of profit that I am continuing to hold. But being in the middle of the trading range I think it is not a good time to initiate a new position. As for a big move down, I don’t expect it since much of the bad news is arleady priced in. It will take new and unexpected bad news to drive us materially lower. We’re stuck in a trading range, so buy the lower end and sell the upper end.