What All Traders Need To Do In Order To Succeed

December 2, 2003
Chris Curran

The
December SP futures opened Monday’s session with small gaps to the
upside, buoyed by analyst upgrades and upbeat holiday shopping news from the
Retail sector. R2 provided good support for the gap as the contract consolidated
ahead of the 10:00 ISM Index and Construction Spending reports. The futures
reversed the pattern we’ve seen recently of moving up ahead of the reports and
then getting sold on the news. After taking a small pause ahead of the release,
the ISM Index’s best monthly gain since 12/83 pushed the futures into fast
market conditions as shorts scurried to get covered and drive price even
higher. A profit-taking retracement found support in the R3 area of 1,064.50 and
reversed back up to print the session high just under monthly resistance at
1,069 (see below). The pace slowed down dramatically going into lunch, until
news that someone had been shot at the UN attracted some sharp selling that
turned into a “flush-out” to form a V-bottom. The bounce that followed trapped
enough shorts to print a new session high.

The December SP 500 futures
closed Monday’s session with a gain of +11.25 points, which was good for a new
multi-year high. Volume was a respectable 663,000 contracts, which is ahead of
the daily average. From a broader perspective, the SPX closed right at 38% Fib
retracement resistance of the entire bear market move from 3/00 to 10/02 (see
chart). This also puts into perspective just how brutal the bear market was the
past 3 1/2 years. On an intraday basis, both the 13-min and 3-min charts closed
with cups and handles.

Tuesday gives us no economic
reports so the bulls will be on their own to hold up the fort. According to the
Stock Trader’s Almanac, December is historically a strong month for
stocks. Since 1950, the month has been the year’s best for the SPX, and the
second best for the INDU.

Treat
Yourself Like a Beginner

I really believe that before
you can get anywhere substantial as a trader, you really have to flush your ego
down the toilet and embrace the pain of feeling like a fool sometimes. No matter
how much it hurts. Most people can’t do this. They may want to, they may talk
like they can do it, but they can’t. You know how some people talk and talk and
talk, and despite what they say, you know it’s just talk? When it comes to
embracing the pain, that’s the barrier right there. Most people are weak, plain
and simple. That’s just the way it is. The only real secret is to always treat
yourself like a beginner, and always be on that hunt for
CLARITY and OPPORTUNITY. Thinking is the
key, whether you have just a few rules, or a truckload of rules. Thinking things
all the way through is the only way to make those connections. Tips won’t do it,
and advice won’t do it, because nobody really knows what your flaws are, except
you.