Index Watch for September 22, 2008

I'm not really sure what to think about the market. There's a part of me that thinks we've found a bottom, but the other part still sees too many "toppy" chart patterns. Unfortunately, the uncertainty in the market created by the government has created a far from normal situation. However, I still think there are still an abundance of opportunities as illustrated by the setups below. On the other hand, it may not be a bad idea to sit back and focus on ETFs until there is some sort of resolution. Common sense tells me that market calls will continue to be easier to make than individual stock calls. When you trade the market, the risk is reduced 20% since 20% of a stocks movement comes from the stock itself, while the other 80% comes from the market. By trading the market, the 20% stock movement is taken out of the risk equation. To keep things really simple, I would suggest trading the holders (i.e. QQQQ,. QID, SPY, SMH, DIA, etc.), which allow you to trade individual sectors. It's not going to give you as much action, but it will allow you to fine tune your skills to the point where you feel VERY confident about your trading. Remember, trading should be SIMPLE and OBJECTIVE. There is no reason to make it complicated. When I find myself thinking too much, I know I'm not trading properly.

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