Monday, February 2, 2009

DOW Breaks 8,000 Level, Now What?

The markets finally broke below 8,000 on fairly hard selling today. If history repeats itself we could see another huge rally tomorrow (like those of October and November) as we do remain very oversold short-term. Still, closing below 8,000 cannot be good for this market's health. So with all this volatility where do we invest our hard earned money? The simple answer is to focus on areas and stocks that continue to experience huge bullish or bearish moves, like gold and oil. Now, they are not going to reverse overnight of course. So, if you are looking to make millions in one day you need to re-read some trading books. However, making educated trades based on odds and risk management will absolutely put some money in your pockets this year. I know I say it all the time, but I can't stress enough how important it is to be patient as a trader. If have an itch to make trades each day just to say you are a "day trader" then by all means, throw your money down the toilet, it will be much quicker. Everyone else, follow me to the promise land...