Well looks like the range that the Dow Jones Industrials chart told us about in the previous post stayed intact. It was posted here and I will reiterate it: 8200 area is an area of support. That mean when price goes there, and becomes very sluggish, it is trying to say that it wants to be bought. Resistance looks like 8500 area but it is much more defined at 8600. Most importantly, the underlying momentum is up and now even more so. From what I can tell, this index wants to go higher. If I were holding long postions, I would give them a chance, still being cautious though. Another thing I am looking to do in this area is take some long call option positions, preferably on an intraday pullback. We will be talking alot about this in the chat room so now is a good time to get in and learn.
Our website is now going into its beta test and you will begin to see changes as we collect feedback from members. You will notice I changed the name if this blog in order to better reflect what it covers. Another new feature that you will soon see is an additional blog category by Pat which will specifically cover the forex market. So check it out.
I was recently speaking to someone who asked me where to begin as a trader. That is a question that I specifically address in an upcoming webinar (see the home page for date and time). I just wanted to say a little about that here as well. The first thing you want to do as a new trader is define your expectations. This is very important. Your expectations need to be very realisitc, otherwise when your emotions take over, you will throw money out the window very quickly. What are realistic expectations? That you will not make money at something like this right away. A very common mistake is new traders coming into this with high expectations of making large amounts of money in a few weeks. They say things like, “I will just get a feel for this by playing with a practice account for a little while. I’m good at math so this shouldn’t be that hard. I have an economics degree and I’m smart so I should be fine.” Trading is not a game of intelligence. It is a game of managing risk, controlling emotions, patience and learning to listen. So as a beginner you want to start off by respecting the market and allowing yourself a realistic amount of time to learn this game. Want to know more? Come to my webinar and I will explain.
In terms of news, we saw some mixed reports that were more toward the bearish side, but market sentiment is still higher. Many times the market will ignore news and do what is wants to do anyway. This is why you only want to be aware of news and not trade on it. So what is coming out this week worth mentioning? Monday we have ISM manufacturing and construction spending. Tuesday is pending home sales and motor vehicle sales. Wednesday is the ADP employment and Bernanke is testifying before the House budget committee (financial drama alert!). Thursday we have jobless claims and nonfarm productivity. Friday is the employment report also known as nonfarm payrolls (NFP). Also Geithner is going to China and alot of talk may be coming out of there during the week so keep one an eye on this for any pointless talk that moves markets. See the details here.
And that is just US news. Eurzone and UK will have a lot to talk about next week. Very important to be aware of if you are trading currencies. The most important events are the policy meetings from European Central Bank (ECB), Bank of England (BOE), Royal Bank of Australia (RBA) and Bank of Canada(BoC). Policy meetings are like the FOMC in the US. If they say something unexpected, markets will move. Especially currency markets. Check the following calendar for more details here.
So remember, keep an eye on those support and resistance levels on the Dow. The market will tell you where it wants to go, you just have to have the patience to listen. Come into our chat room and we will show you how this works. See you there!