Sunday, August 12, 2007

My Opinion on the Market, China and What's New

Big post today. I plan to have a busy week at work, so I don’t know how much trading I will get to do. This is not a market that I want to auto-trade or swing trade. My plan for now is to sit in cash, protect my gains and observe the carnage, and hopefully learn a few things along the way. I hope to make some money by day trading during rallies, which can be quite sharp in this kind of market. I may look to get short after the next rally, as I think the market is going to be in trouble or some time to come. Cash is a good place to be right now. But it is worth noting, that the uptrend since 2002 is still intact.

I have been reading some comments in other blogs and newsletters about Black Monday, the market crash of 1987, and something similar being just around the corner. Don Harrold has a new video on his site talking about similarities between the market just before the 1929 crash, and the market today. Although he will deny this, Don is a perma-bear, but he does raise some interesting comparisons. I am more concerned about a crash in China. A few months ago, the LA Times had an article about the investing going on among Chinese citizens. They are jumping into the market fully margined, even mortgaging their homes and taking credit card loans to buy stocks, making incredible paper returns. Sound familiar? The Shanghai composite is unquestionably a bubble ready to burst. I believe one morning, we are going to wake up to news of a huge crash in the Shanghai composite; a jump-out-of-window type crash, reminiscent of 1929. This would cause a huge ripple effect on markets around the globe. One site that is following the situation on China closely is StockTiming.com. Marty has a free daily newsletter, and sometimes has some good stuff regarding China.

On an unrelated note, I have posted a reply comment in one of the threads talking about my opinion on the trading hypnosis MP3 I used awhile back. You can check it out there if interested. I may post more on it here soon.

Lastly, I opened a demo Forex account this week that I am trading from as I type this. I would like to be able to trade in the evenings, since I have a day job. The Forex market provides the chance to do that. So maybe in a month or two, I’ll be posting Forex trades here too. I'll see how the demo goes first.

Good trading.

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