My take on this ongoing argument.
I trade off of the fundamentals. The supply and demand. Not the spin that is so prevalent. If you trade off the spin you will have losses. Most of the negative about fundamental trading comes from not knowing the spin from the supply and demand. If you do not have this, then you would probably be better off trading technical. Much that is discussed on entertainment T.V. such as CNBC, etc. is nothing more than surface reporting. If we as fundamental traders traded off the gov numbers or the Enron numbers or Qwest, etc. we would be better off giving our hard earned money to a mutual fund. Watching massaged numbers from company earnings or gov data is useless (in my opinion). This is why I prefer ETF's they don't follow each and every blip number that comes out.
If you look at most major charts, they show a reversal in several sectors. Grains look to have peaked and are now entering a bear run. The dollar has bottomed and is making a solid run. etc.
While I do not discount what is going on with the charts, the overall fundamentals have gotten even more pronounced. So the average trader says what gives, more negative news coming out yet we have a 3% Dow rally??
Valid questions. Now as a long term trader these are merely buying opportunities, as a technical trader, these are key points to reverse short term trades.
Fundamentally we are moving in the same direction we have been for the last 2 years or so, technically we are reversing and are going to have a while of counter trend trading.
If you are sharp with the charts and can maneuver quickly and swiftly, then you will do well. If you are like me and knew the correction was coming but has never been able to tell when and for how much, then you stay the fundamental course buying far months out and selling the short months ignoring the hiccups along the way. Naturally this is easier said than done when you take a position and watch as the spin is yelling you are wrong.
Just one traders take on how to figure out these markets. I am sure there are many more ways to skin this market, you are just watching one way.
Maybe this weekend I will read up on how to add charts to this blog so that we can watch together what the charts are saying versus what the fundamentals are saying.
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2 comments:
Dell,
When do you roll out your log positions? For instance most of my long postions right now are June. I have rolled out a few, but sometimes I would actually keep it til the May expires and then roll out the long. Do you keep them to the end? Of course it depends on the price action, but just generally how long do you keep them?
Thanks
Debbie
I take them as far into the long month as I can. If I have structured the trade right, it usually means (in your example) once May expires, roll out the June Or roll out the June before May ex date if May is in the money and will be assigned.
Now if the market has moved more than anticipated, then I can wait for a correction and then roll the long month out (June to say Jan.) as well as up.. and then roll the May.
Hope this helps
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