Galt Stock Daily
Fast Profits, limited losses in a changing market!

by John Dalt

12/11/08

Today's market suffered from no news.  The Detroit Auto Maker bailout seems stalled in the Senate.  Trading floated along within 100 points of open until one hour before closing when the sell orders hit the board and dropped the DOW to minus 200 in five minutes.  I am losing confidence in the market direction.  We continue to drift lower, with today marking the third day down.  I was able to exit a couple short-term positions with small gains, but made the mistake of initiating a new bullish position.  It seems the market is pricing in failure of the auto bailout, the only other news is companies lowering guidance.  Friday reports Retail Sales, which will be depressing.  This is not a great environment for bullish sentiment.

Jim Nussle, Director of the Office of Management and Budget was on CNBC explaining the Budget Deficit in November.  The U.S. came up $164 billion short in the month.   $99.6 billion was spent on bank bailouts.  $164 billion used to account for a whole years worth of deficits!

The difficulty with trading stocks is the trader's "rat brain". This technical term is part of our psyche going back to Neanderthal Man. Before modern medicine and doctors, any injury could lead to death. We are hard wired to avoid conflict or injury. We run at the first hint of trouble, and love to jump on the bandwagon. Even worse, sometimes we freeze when confronted with danger. These emotions cause traders to buy high and sell low. We get in for the party and try to squeeze out the backdoor when all the drunks are leaving. The other difficulty in trading stocks is staying with a losing position. A trader has to be able to reverse position at the first hint that his trade is in trouble. Reconciling the emotion to avoid trouble (rat brain) and staying off the momentum party wagon with cool switching of positions when the facts change is a struggle all traders have fought. We may be confronted with a choice tomorrow based on the news out of Washington.

WARNING:    The information presented in this newsletter is based on generally available news releases, corporate filings, current events, interviews and the editor’s opinions. It may contain errors and you should not make investment decisions based solely on what you believe you have read here. Do your own research, it is your money. If you lose it, it is your responsibility, not ours or your grandmothers! The editor may or may not have a position in any securities discussed. The editor may have held a position in a security earlier, or in the future.

Back to Top

HOME