An interesting day on the Street dear readers more on that in the end. Firstly, today was bullish, make no mistake about that. Its been quite a rally since the beginning of last week and a few days of rest is just what the doctor has or rather, should have ordered for the tired bulls. Secondly, I am not going to post any charts today. Why, you ask. Well, JP Morgan reports in the pre market tomorrow dear readers. And to me, that's what's going to decide the action not only tomorrow, but also in the next few days. I swear by charts and technical analysis but there are times when one has to throw away the charts outside the window and I think this is one of those times. As if things weren't interesting enough tomorrow, Google reports after hours too. So, keep that in mind while carrying overnight positions tomorrow. If you have been long for a major part of this rally and are still holding long positions, I hope you have been taking partial profits along the way.
Personally speaking, I just made one trade today - PMI. I got in at 3.50 for a day trade as there was no way I was going to hold this stock overnight with JPM reporting tomorrow. This stock is permanently there on my watchlist but I almost always use it just for day trades as it has this nasty tendency of gapping up or down big time. Anyway, I entered it based on this chart below that I posted on twitter at that time.
A thing of beauty, isn't it?? I got out at 3.65 for a gain of 4.28%. Its a nice feeling when things go exactly according to plan. Only problem is that that doesn't happen often enough :).
Now coming to the interesting part of the day that I hinted at in the first line of the post. The FED came out with its announcement today afternoon. A lot of traders on twitter/blogs reacted negatively to it (nothing wrong with that) and expected the market to fall badly. But the bottomline is the market fell only 50 odd points. A 50 odd point drop after 6 consecutive days of gains! And that's bearish?? You gotta be kidding me! And that's why it is very important dear readers not to trade the news, but the reaction to the news. Always remember, that the market doesn't care a damn about our opinions. Its important to trade what one sees and not what one thinks. I learnt this the hard way in my first six months of trading but that's a story for another day. I felt it was important to make this point with it being earnings season and today being a good day to observe this philosophy in practice.
Take care and good luck!