Stocks are NOT to be held Forever

The Monday before July expiry the Dow has been up five years in a row. We saw tight profits on the day trade put on Friday, and watched the market hit highs of 8224 and lows of 8053 on the theoretical Dow.

Bottom testing may not be complete, as earnings are still coming out, but a more moderate move to the upside on any event that can be construed positively. Market moves, if muted, could show the slow signs of economic recovery.

Much of the market is based on reaction to events, in a group emotion. For example, now after 5 months America is losing "faith" in the economic stimulus, a group emotion based on FEAR.

There will be a potential for downside to 7950 as a final bottom test, but a more likely market test at 8250 and then 8376. At 8376 to 8400 is a strong resistance, and we'll watch volatility, earnings, and volume for what could be a reversal to 8050 area.

Many subscribers ask why we discuss and use the Dow in our projections when we trade the OEX. Because we are day trading, and the Dow replicates the OEX almost perfectly we use the Dow because it's easy to keep up with in the day, and volume is discussed, unlike the OEX. We like to trade on high volume

"As of June 3rd, U.S. Stocks have underperformed long-term Treasury bonds for the past five, 10, 15, 20 and 25 years." We all have heard though "that there has never been a 30 year period since 1802 when stocks have underperformed bonds. This theory is unproved, and comes from Stocks for the Long Run, by economist Jeremy Siegel. As usual, this is an extrapolation of data that is "interpreted."

To Floyd thinking, stocks are not to be held forever, and are to be used as vehicles to "trade for profits," whether from index options, or actual stocks or stock options.

We suffered our fourth weekly decline in a row, the longest losing streak since the spring rally began in March, and lowest close since before April." WSJ

Please let me remind you of the unbridled optimism that has permeated our economy, and now the impatience that "the Obama plan is not working" (it's been five months), and that we are all enjoying Sarah Palin stake her position. This alone is the best comedy I've enjoyed in years. Personally, I vote for Shooter Cheney for President, and Maverick Sarah for VP in 2012. They will solve it all really fast :)