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October has passed.  It was actually a pretty flat month. Unless one bought/shorted stocks that outperformed the general market, he perhaps was flat.  Do not be upset if you were flat in Oct. because being flat is much better than a negative number. 

 

As we can see from the chart below that the market has recovered a lot from the low a few months ago. This does not mean that the market is going to drop though.  I believe a lot of hot money missed out on the bounce. But they are afraid to get in now because they think the market is perhaps due for a correction.  We traders will have to deal with this kind of conflicts every day. For beginners, it is perhaps easier because they have loads of courage and they got in the market at the right time. Because they do not know how much the market could hurt them, they would buy anything until one day or a year like 2008 hits them so hard that they could never get up.

 

 Here is the monthly chart of S&P 500.

 

This actually makes it harder for the old hands.  If the market is tanking hard, he does not want to buy because he knows not to catch a falling knife.  He would wait for a visible uptrend to go long.  But when an uptrend is clearly visible, it might be due for a small correction.  Does he have the courage to sit out that small correction or buy on a dip?  What if he buys on a dip and it continues to dip further like we saw in STEC?  There are always a lot of questions to ponder over in the market.

 

I did pretty well in October considering I beat the SP 500 by quite a margin in term of percentage.   In terms of absolute dollar amount, it is more than enough for the food, gas, and other regular household expenses for Oct.  You can see the results here.

 

I think the market is still in a healthy uptrend. The weekly SP is still in a visible uptrend.   Whether you and I think it is overbought is totally irrelevant. We trade the charts. There are 2 months left in 2009. Let’s see if I can have 0 monthly draw downs for year 2009.

 

Hope you are all doing well.

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