MARKET UP...BUT VOLUME IS LIGHT

The market was up today, but the volume...particularly on the S&P futures...was lighter than normal. This could mean that the rally over the last three days could be near an end. Having said that, there have been some buyers over the last few days. The buying could be just short covering, which might help explain the lighter-than-normal volume. I still feel that we are at a top in the market. We are currently at 1171 on the S&P 500. On Monday I mentioned the 1170 to 1175 area as the next resistance zone to watch. If we drop, my conservative target would be about 1000 on the S&P 500 (about a .382 retracement of the March 2009 low to April 2010 high), but there are other opinions that it could be much lower. We've seen how fast the market can move down. I think this is still a good place for new put option trades on the SPY. For those that got in yesterday, I still feel that the trade will work out fine. This is why I decided not to use a stop on this trade. That doesn't mean that I didn't calculate the risk. I need to remind everyone that just because I get aggressive or get confident in a trade doesn't mean that I throw money management out of the window. Money management will always be the most important part of trading. Not every trade will work out according to the plan. I do not have a crystal ball and I can't predict the future. I have posted many success stories from the week. These stories can be a source of motivation to keep working hard at mastering this craft. They can also cause some to be blinded by greed. This strong emotion of greed can cause some to abandon sound money management principles and gamble away their trading accounts. Some of these same traders might be eager to blame me if their gambles don't pay off. Those students will have missed the whole point of the coaching program. They will have ignored all the warnings that were taught in the classes...and increased the cost of their education. I have often stated that we will learn these important lessons eventually. The question is how long will it take and how much money will it cost before the lesson is learned. If you follow the guidelines in the course, the tuition cost will be seen as the biggest bargain in the world...compared to the losses incurred by not applying the information. Many of my students have come to my course after having lost money in the market for years before they finally learned correct principles. I'm sure if you asked them, they'd say that they wished they had learned some of this stuff years ago. I hope everyone profits from this next expected move down, but more important to me is that I hope that no one gets wiped out if it doesn't work out. Be smart.