Forum Archive Index - October 2001

[Phaedrus <Phaedrus@techemail.com>]

 With so much negative sentiment about (and for good reason) it is hard to know 
whether you should be long in the market at all just now. I use a simple system 
based on the DJIA to control my level of market exposure. If the Dow is in an 
Uptrend, I am 100% invested in the US market. When the Uptrend ended on 
25/5/01, I moved to 50% cash. When the Dow broke through the 10,170 support 
level, I took this as a very bearish signal, and moved to 100% cash. By 21/9/01 
there was a clear price/volume climax. These often mark significant turning 
points. The next trading day marked the beginning of an Uptrend, with a higher 
high and a higher low, a pivot-point reversal with a Close higher than the 
previous days high. Because of this I re-entered the US market, moving to 100% 
invested. The last two weeks have been the most profitable I have had this year 
in the US. This is a time for caution, though. Every trade must be protected by 
a stop-loss order or a trailing stop. 
 The underlying situation has not changed - fundamentals are bad (and getting 
worse) and the Dow is in a Downtrend overall. In spite of this it is still 
possible to short-term trend trade profitably, from the long side. With caution.
          Phaedrus.
 
 


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