A Game Plan For This Week
With the help of TradingMarkets CEO Larry
Connors, I have put together a
general game plan on how to best proceed this upcoming week.
1) Don’t be a hero! As this is
being written on Saturday evening, we are
all being urged not to sell stocks on Monday. If no one is supposed to be selling,
then why are the averages called to open at least 3% to 5% lower, 40 hours from
now?
No one, and I repeat no one, knows what Monday will bring. The safest thing
to do is to trade small or not trade at all. If you do decide to trade, use
reduced position size and make sure you use protective stops. Also, be fully
prepared of the likelihood of your stops being hit due to the anticipated
increase in volatility.
2) Counter-intuitive will likely prove better than intuitive. Everyone is
going to be selling airline stocks and buying defense stocks. Are you going to
join the herd? And who is going to be on the other side of these trades? Likely,
the most successful group of traders in the history of the stock market…the
Specialists!3) If defense stocks, security stocks and gold stocks don’t hold Monday’s
gains, they may prove to be one of the great short opportunities of the year.
Why? Because if they don’t go up on this past week’s news, when will they ever go
up? Again, no predictions. Let the market action dictate how to proceed.4) Re-read Kevin Haggerty’s and Tony Saliba’s lessons on the home page. We
republished them for you in anticipation of Monday’s trading action.5) Use the TradingMarkets.com
Stock Scanner
and look for
the stocks and the industries that have had the best performance as of late.
There is a better-than-even chance these will be the stocks (along with the Big-Cap Blue Chips) that will lead the
way if this market turns higher.
6) Please use protective stops on every
trade…especially this week. TradingMarkets, its co-founders, and its
contributors have emphasized this point (OK, we have beaten it into your
head) since inception. And this lesson is even more appropriate for this
upcoming week!!!Â
Good luck and please be very careful.