Nothing to Get Excited About

 | Nov 12, 2012 | 2:20 PM EST
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Although the best advice I can give about this market is to respect the trend and not worry about doing much until the price action improves, it is still tedious to deal with this poor action. On one hand, you want to monitor closely and watch for signs of improvement. On the other hand, it is going to take time before there's a turn that can be trusted.

What often happens in a market like this is traders put on small trades just to stay busy, and then they are nicked up with little losses when the indices do little and stocks move randomly. Since we are traders, it feels like we should always be trading, but the reality is that there are times when it's better to stay away.

I have found my own trading to be a good example of the 80/20 rule. I probably make 80% of my gains in 20% of the time. The other 80% of the time, I'm treading water and not making much progress. The problem is that you never know when those peak 20% days will develop, so you have to stay ready and watch closely.

A great fallacy of trading is that you grind out steady gains day after day. Some pure day traders may do that to a limited degree, but even extremely short-term traders will find that market environments vary widely and you just can't produce the same level of results consistently over a long period.

One positive thing about the market is that things always change. It may be very dull and slow right now, but I'm positive that it will change. We just have to wait it out.

I'd really like to be more upbeat but I see nothing in this action to be excited about. The biggest positive is that this action is starting to wear out folks and they are giving up in disgust, but it is still early as far as that goes. Markets like this have a tendency to drag out long enough to drive everyone crazy.

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