1) At the recent arts and crafts beer gathering I hosted, J.C. Parets--to my surprise--made a strongly bullish instance for stocks. I told him inwards no uncertain terms that I was bearish. The conversation stuck amongst me because I brain to smart people. H5N1 salubrious flat of self-skepticism is a proficient thing: the greatest losses come upwards from drinking besides deeply from one's Kool-Aid. J.C. spelled out his bullish case--his challenge was: what sector is breaking down?--and I took that to heart. Since that time, I've even as well as hence traded the bear side, but I've been quick to receive got profits because I haven't seen a wholesale breakdown. Was I right inwards my downside leanings? Yup. Was J.C. right well-nigh underlying strength? Yup. On Fri nosotros unopen amongst 541 stocks making fresh monthly highs. That's the highest number inwards over ii weeks. We also unopen amongst 754 stocks making fresh monthly lows. That's the highest number inwards almost ii weeks. It pays to brain to smart people: if smart people disagree well-nigh the market, perchance the respond is to merchandise nimbly.
2) Another smart marketplace observer, @ivanhoff, points out that corrections inwards bull markets frequently occur through sector rotation. It makes sense: when involvement rates plow a corner, about industries as well as companies volition live on adversely affected; others volition benefit. High-yielding utility shares receive got been relatively weak; banking issues receive got been relatively strong. We've been correcting, but through rotation. That's non how bear markets behave.
3) I expose it useful to follow the tweet current later big information releases as well as parse the signal as well as the noise. @RedDogT3 is about other 1 of those smart guys I brain to. His focus on depository fiscal establishment stocks later the Fri number made lots of sense.
4) I flora happiness inwards a romantic human relationship when I finally got it into my thick skull that what I needed was no drama. None. Zero. All the things I had told myself well-nigh moody people beingness somehow deeper as well as to a greater extent than complex were hogwash. Moody people, for me, were tiring. Even now, I start to read an e-mail or tweet high on the emo scale as well as I'm reaching for the block button. H5N1 major stride inwards my trading was coming to the same realization. If I await for the right things to delineate of piece of job upwards as well as boundary myself to signals amongst a demonstrated edge, my sense is far to a greater extent than rewarding inwards the long run than going through the ups as well as downs of trading less selectively. Sizing upwards when yous receive got something really reliable that yous know really well: non a bad formula for relationships as well as trading.
5) After a catamenia of trading actively, I had to halt trading altogether from 2010 through finally twelvemonth due to compliance regulations at the hedge fund where I worked. That was also the catamenia inwards which I had to stride dorsum from blogging. Since returning to trading, I tin tell that markets are to a greater extent than hard than when I left inwards 2010. At kickoff I idea it was simply me, as well as that I was rusty from my fourth dimension away. But it was to a greater extent than than that. I encounter many to a greater extent than precipitous marketplace moves on precipitous flows that volition receive got prices uncomfortably beyond recent highs or lows. Maintaining a salubrious skepticism on seeming breakout moves has been adaptive. I receive got benefited greatly past times going amongst marketplace trends as well as past times patiently waiting for counter-trend moves for entries. One of the best emotional indicators telling me to stand upwards aside is fearfulness of missing a marketplace move.
Further Reading: A Theory of Romantic Relationships
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