Sunday, May 10, 2009

Uneasy Stockmarkets - Momentum Trading Or Guess Works

Less than 3 Months ago, fear of financial institutions failures, unemployment, bailouts and Iceland was colder than North/South Pole when it folded.

Then, the whole world seems slipping into a blackhole; there was light at the end of the tunnel and that was a rushing train.

Today, financial institutions are said to be safe and their screaming calls for cash infusion is prudent. Unemployment isn't just as bad and Chapter 11 reads like another page out of Harry Porter. Summer seems to have descended on Iceland.

Stockmarkets have recovered with a V-shape vengeance; has God wiped clean the slate filled with greed and excessiveness? WHY did, or did, the stockmarkets ignore reality and move ahead?

i) There is a pool of funds, which was sidelined, that needed to be invested
ii) Make-believe capitalism demands performance and if you are not in it when the wagon moves, you are dead. If you sell/short and you are caught wrong footed, you double buy/long, vice versa.
iii) Speculators who itched to get in, will eventually get in and the funds shall exit
iv) When the music stops, the tales are of similar veins

What you see is called "Momentum Trading", that is, you trade the trend and by sheer strength of liquidity, views are forced to change with the tides, especially if you need to turn around, you double it!

Then, players become immune to all those negative news and perspects as "if its already so bad, it can't be that bad, right?" Well, God knows!

Don't throw caution to the wind. Some wild cards win; most loss.

You will make money whether you are Bear or Bull. Only, sheep get slaughtered. If you are neither bull or bear, you better remain human and not a sheep.

Watch your back and keep your cash except if you have some to spare. Make sure you have some spare money left to buy face masks when the (financial) flu strikes again.

Dead man tells no tales. Good luck!

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