I'm always looking for the next trade, but not a daily or weekly trade. I do it quarterly. In April of 2010, I started looking at positions that would make me a profit during the summer, My catalyst was going to be July earnings. All I needed was a pullback in May and/or June. Boy, did I ever get that. It almost felt like I was magic. I finished buying all my positions that I had researched starting in April by July 3. My thinking was that traders would get out of equities by July 3 because it was a long weekend and anything can happen during the long weekend. So on July 3 I bought my last and most expensive stock position with my bulk summer (teacher) check, GS. My hope was that beginning July 7 things would start getting better as earnings came in. There were a few bumps and potholes in the road, but overall, I think most of us are doing well.
The S & P just passed a technical, whatever that means, of 1100. From what I understand based on experts' posts is that if we can get past 1100 and make it to 1130, the bears will have to cover their shorts and a spike in the market will happen. I have no idea how anyone comes up with those numbers, but I love the internet, and I guess I don't have to know how to come up with 1100 as the magical number, I just need to know what to do when it happens. If it happens, and the earnings reports of my current positions are positive, then I'm going longer that I originally planned. The original plan was to be out by Aug 6. If we hit 1130 by 8/6 then I'm going to keep going until the 13th and keep reevaluating week to week until I need money.
At the same time I'm looking ahead to 3rd quarter earnings. Another bonus, mid-term elections. Here's what I learned about mid-term elections and the stock market; according to Marshall Nickles of Pepperdine University the first two years of a president's term is not the best time to be in the stock market, but that the last two years are very productive. And he showed charts that were simple to read. I got it. Apparently, lots of people seem to like the paper Nickles wrote in 2004 and are beginning to reference it now. So according to trend, 2009 and 2010 are supposed to suck, and by 2011 things should start getting better. Why? Because the incumbent party wants a happy voter and they usually "prop" up the stock market. I would read his paper and see for youself.
After you're done reading, google his name and see how many times this paper is referenced. A lot and I think it will be referenced more and more as we get closer to mid term elections. But I still have questions. Should I get positioned right before the mid-term election in October (remember, it is earnings season again.) or do I wait for what some people are predicting will be the massive sell-off before the end of the year due to the rise of the capital gains tax expected to take effect 1/11? That would mean I either get positioned for earnings in October, sell off quickly, and then buy back at the bottom again at the end of December or I go to cash after this technical of 1100 is done making me money off bear shorts and wait until the end of December. As always, more research is needed and I'll let you know. But as always, I would love some educational input.
Disclosure: long gs