The Good 'Ol Days Are Gone

 | Dec 28, 2011 | 2:39 PM EST  | Comments
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After a nice little flurry of selling, we stabilized and turned back up. But with volume so light and no strong emotions about all you can do right now is day trade for pennies.

Breadth is quite poor at better than 3-to-1 negative and all major sectors are down with precious metals and oil leading the weakest.

We are already rolling back over as I write and I just don't see the buyers making much of push. Many are done for the year and those that are left aren't big institutions looking to build long-term positions.

I'm spending my time doing some administrative tasks while I contemplate the year ahead. What I found most striking about the market this past year was how many aspects of trading have shifted. Pure technical analysis has been much tougher to apply and the momentum style of trading that has been popularized by Investor's Business Daily has not been an easy approach. The nature of the movement in the market is different, with more low-volume V-shaped action and more sudden overnight movements. 

What I have found most difficult in 2011 was that the market was much more focused on macroeconomic events that rendered individual stock picking must less important. Market timing has been what has mattered most and more often than not the big moves don't occur intraday.

I often wonder if it is the growth in high-frequency and computerized trading that has made the market more focused on macro matters or is the focus causing the computers to become more dominate?  Whatever the cause-and-effect relationship may be, it is clear that the market does not trade like it did before the crash in 2008-2009.

Unfortunately, I don't think we will even see a return to the old days. We have lost too many individual investors and the problems of unemployment, weak housing and a lousy economy have robbed us of the spirit that used to make trading so dynamic.

In any endeavor it is necessary that we adapt as conditions change and that will be the challenge for us in 2011. I'm confident that the opportunities will be there, but to exploit them we may have to think differently. It sure would be nice to have a market back like we had in the good old days, but if this job was easy we couldn't become rich doing it.

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