BUYERS ARE STILL OUT THERE

These are crazy times, but we can still trade when it's crazy. The market has managed to pull back a bit since my last posting. This is healthy for the current uptrend. The buyers are still buying the dips. The market was down almost a 100 points today, but the buyers came in and closed it up 10. If the pattern continues, this should lead to a rally to a new high within the next few days. CSCO was down big (in after hours trading) after their earnings miss. We'll see if that is a drag on the market tomorrow. So far the selling has been controlled. I haven't seen any panic that I think would lead to a bigger drop. If I see anything, I'll post it. One thing to keep an eye on is the ETF's (Exchange Traded Funds like the SPY, QQQQ, DIA, GLD, XLF, XLE, etc.). There is a growing fear that they might be able to crash the market if there is any sort of a panic sell off. I don't know anyone who totally understands these financial products. I've been trading them for years, but I don't fully understand how they work. This makes ETF's similar to the CDO's (Credit Default Swaps) that helped cause the financial collapse. No one fully understood those instruments either. I don't know how these instruments can crash the market...but I do know that if traders think they could collapse it, that might be enough to cause a self fulfilling prophesy. Use a bank as an example. If a rumor came out that a bank might be insolvent, it wouldn't matter if it was or wasn't. People would rush to withdraw their funds just in case. This rapid withdrawal would cause the bank to collapse...even if the rumor wasn't even true...and even if the customers knew their money was backed by FDIC. No one would want to be without a chair when the music stopped. Many investors put their money into ETF's as a way to offset rising mutual fund fees. These ETF's have billions invested in them. If there is any evidence that they could collapse, it wouldn't take much panic selling to trigger that collapse. We now live in a "bubble" society...a world "bubble" society. There is always something that collapses when there is a major market correction. This one is just a theory...one of many that we could come up with in these crazy times. It might just be paranoia...but I don't want to get blindsided by something that I didn't at least consider. Financials sold off pretty well yesterday, but this could be another buying opportunity. GS, MS, AXP, JPM, and WFC...or just use the XLF or FAS if I haven't scared you away from ETF's. Keep in mind that I still plan to trade ETF's...at least for now. They're still one of my favorite trading instruments. The XLF and FAS look like they have an inverse head and shoulders pattern...which is a very bullish pattern. However...if they were to drop below their 50 day MA within the next few days, it would negate this bullish outlook. I also still like AAPL and NFLX, but we'll see how the Cisco earnings affect their prices. I'm also bullish on FCX (Freeport McMoran). Copper, gold, and silver just keep going higher. Try to keep your trades more short term. This market could turn at any moment, so we want to take profits quickly. Also, keep your position sizes small. You will not likely make up for drawdowns on this upward move of the market. The big money will be made when it turns downward. Don't put your entire account in this market...and especially don't put it all on bullish trades.