It is extremely slow and quiet ahead of tomorrow's FOMC meeting. As we bounce up and down I want to take a minute and explain what I have been doing over the past few days. Not much. Of course I have some trades on the page and some positions that have been with me for a bit of time, but as far as entering new positions I am having a difficult time coming up with ideas.
Many traders have a hard time coming up with fresh ideas, especially if you trade off technicals because there may be a lack of good set-ups due to market conditions. It took me a long time to understand this, but that is ok. It is ok to be a professional (or non-professional) trader/investor and have a lack of fresh, new ideas. To me, this is the most difficult aspect of trading. I hate sitting here without being able to do anything with conviction. I hate sitting on my hands while knowing there is a moneymaking opportunity out there somewhere!
There are some of you that may be saying to yourself that I am crazy, that I should be able to find opportunity in every market and that's the beauty of this business. That is true. There certainly is opportunity each and everyday but trading, more specifically fund management, is about capital preservation. So as I sit here and observe stocks that are acting in the manner which I thought they would, even though I did not play them, I find some comfort in the fact that I am not heavily invested. I find at these current market levels I am not comfortable entering new positions on either side of the fence. This tells me that others may feel the same anxiety causing a choppy environment where it is quite easy to get shaken out of positions.
To conclude, I feel that this market is at a critical level. The S&P is sitting right above support at 1060 and the NDX has been flirting with 1400 all day. Could we bounce off these levels? Sure! Tomorrow I may be writing about how I wish I had stepped up to the plate to buy the market right here. But TODAY I am going to watch, going to observe and maybe take a few stabs late in the day as the market tries to figure out which way to go. In the meantime however, I will be scanning charts and working the phones trying to come up with ideas but until I am more comfortable I will force myself not to trade.
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