Pre Market- August 2nd 2007

Good Morning to all..

At this time the US futures are up but they are cautiously up based on the fluctuations. The advances in the market yesterday at the last 30 minutes will cause some early profit taking on the part of those who are still exploiting any opportunity to get out of the markets. There is still a lot of questions which remain unanswered as to just how far the lending problems will reach. Often when a problem is uncovered there are still more parts of the problem yet to be uncovered. Will the housing problems end up eating away at the overall economy even more? Will the banks and the mortgage companies increase their limits on who they issue loans to? Will scenarios like these play out and further slow the growth of the economy? These are the types of questions that are driving the fear in the markets and creating the high volatility. Everything has a way of migrating into other sectors over time. What may be a healthy sector now in 6 months will be a laggard after the final domino falls and then impacts that previously thought 'untouchable' sector. A lot to ponder and a lot of speculation on the part of the economists.

Where does that leave you and me who just want to make money in the markets? It leaves us where we always have been and that is we apply our understanding of technical analysis of the charts and we use those charts to our advantage for finding the right stocks at the right time.

Why I am not actively trading during this period is because the only way to trade in this is to day trade. Swing trading in this volatility is near impossible. And day trading is a whole world of its own which requires a vast amount of capital to work with, a very in depth understanding of technical analysis, and a robot like emotion response in order to keep cool, and you must be able to be in front of the trading screen all day. When I post my first installment of the series on swing trading and "how to be a swinger" I address the difference between the major types of trading.

I am watching, scanning, and researching stocks for our next swing trades. I'm looking for the stocks that stand the best chance for recovery/gains. Ones that will be less likely to be moved on fear with regard to housing, etc. Remain patient and soon our swing trades will come to us. As an experienced trader I have learned over time that you should never "force" a trade. In other words don't trade just because you feel that you should be in there with the bulls and bears fighting. Money comes to those traders who know when to stand aside and when to jump in, now we stand aside. The market can sometimes be like a hockey game and once in a while there are some bloody brawls between the players and it is tempting for the other players to all jump in to the fight. As smart traders we stand aside and let those who are fighting work it out and then when the game resumes we will open our wallets and start buying the popcorn and beer again. Until then it is safer to watch and analyze. I am watching and analyzing and when we take on new swing trades we will be positioned to capitalize on the bloodshed.