FOCUS ON THE SMALL PICTURE...BUT BE AWARE OF THE BIG PICTURE!!

I scan a lot of websites and read a lot of headlines during the course of a trading day. Often I could care less about the details of those articles (no offense to the authors). What I look for is the sentiment...in other words, what is the mood of the market. Is the crowd too bullish or bearish...or is it equally mixed? I understand that when the "crowd" shifts too far to one side, the opposite move often happens. This is where my great dilemma comes in. A true trend trader only looks at the trend. They try to ignore any other factors but price. They don't try to predict anything...but rather trade in whatever direction the trend is taking them. I really can't call myself a pure trend trader. I want to be one, but I can't seem to ditch the need to predict. I think the reason why this hybrid approach still seems to work for me is that I understand my strengths and weaknesses. I trust my predictions...until they break the trend. You have probably heard the phrase that bullish trends often climb a "wall of worry". In other words, the market can go up sometimes in the face of economic uncertainty. That really does describe the position we are in right now in the markets. Economic reports come out almost daily it seems. We anxiously turn on CNBC to have them tell us what the reports mean. Some say they're bullish, some say they're bearish, some even say they're irrelevant. One thing you will have to master to become a successful trader is the ability to make your own decisions...to decide which trade and what trade direction is best for you. You will need to master the ability to get into trades when you don't feel totally confident of the outcome. You see...by the time you feel comfortable about the direction of the stock, the direction might be about to change. This might be why it always seems like the trend changes once you decide to get in it. It's like walking into a party and everyone leaves. They probably all left because you arrived at 1:00am and it was already time for the party to end...but you will probably feel like they left because they somehow didn't like you. We can get that way in the market sometimes as well. The mood I have seen in the market lately is a mix of doom and gloom and cautious optimism. I would like to say that the doom and gloomers are just short sellers that are betting the market will go down...and they are just trying to help that cause...but I feel that the market will eventually retrace...possibly a lot...like maybe DOW 7500 or 750 on the S&P 500. On the other hand, I see a lot of bullish ABC patterns from this last pull back in the market. We have had some nice moves on energy related stocks as well as some of the financials. We seem to be continually climbing this "wall of worry". So my advice to you is to trust what you see right now...the bullish ABC patterns...the bullish trends...the new highs...but be aware of the bigger picture which could be a large drop...out there in the future. We can climb the "wall" as long as we are aware of what could be on the other side. I've just managed to combine all the sentiment out there into this one headline. Now that I think about it...when it comes down to these conflicting articles and authors...maybe they are all right.

You should be taking some profits on some of your energy trades. MOS, POT, TRA, AGU, CF, IPI, and SQM have already made some big moves. You might want to hold on to one or two contracts if you can...but try to lock in a lot of the gains you have already made. This would not be a safe entry point into these trades. You might want to wait for a pullback to get a second chance. For current opportunities, I still like the patterns in natural gas...CHK, APA, NGS, and UNG. Coal is on the move again with JRCC, BTU, ANR, MEE, FCL, or KOL. Other energy related stocks include CLR (I really like this one), RIG, HES, DNR, DVN, EOG, and BP. There could be a pullback tomorrow in a lot of these stocks so watch them at the open...and again near the close...to see if opportunities arise. Another stock to watch is HMA. I like the pattern and the volume was higher than normal today. Also watch UNH...it might still be a bit early...but we have still done okay lately with a few early entries...just look at how well the chip stocks are doing lately.