The Day that Was - September 5th 2007

Fear and Greed

The markets move on fear and greed everyday. It is how the markets work. Fear and greed is another way of expressing "supply and demand". What makes a stock go up or down is the supply (too much supply it goes down) or the demand (the price goes up when everyone demands to own it).


When fear strikes the market then the supply goes up as people don't want to be holding the shares, so they start selling. When greed takes over then people are paying up the stock in order to get their hands on some shares. This is the normal day to day process that makes the stock market what it is. But since mid July when the whole market came tumbling down on the credit crisis the market has been running on extremes of fear and greed. And in these extremes it is difficult to try and make money consistently without beating your head against your monitor. This is why we have remained on the sidelines and have continued to tell you to do the same by not providing you with swing trades to enter.


Lisa and I are absolutely amazed at some of the things we are reading around the net. There is some outright reckless advice being given to people who are feeling as if they need to be in this current market battling it out with the rest of the bears and bulls. And to only be carried out on a stretcher barley alive. The markets are currently trying to digest a number of economic situations which have the potential of having a very substantial impact on the health of the US economy. And the wild swings up and down is a result of the extreme fear and greed that changes on the slightest bit of news.


Do you want to make money by investing and trading in the stock markets? Of course you do. As I stated a moment ago Lisa and I are absolutely amazed with some of the things we are reading. There are plenty of web sites telling people to buy this, that, or the other thing to only be stopped out of their trade (stopped out means the use of money management to protect the trader from extreme losses by closing the trade when it starts to eat away at your capital). And some traders don't even know or understand the proper money management techniques required in order to survive. Lisa and I are very disturbed by the advice out there on the net. They are being reckless with other peoples money and that is sad. Some people are addicted to trading and feel they "must" be in there and they are going to lose. But they don't learn from their loss and they just go in for more punishment.


RebelTraders is and always will be dedicated to honest, objective, and to provide trading advice that is in the interest of making money, not throwing it into a blender and hope for the best. We are establishing ourselves to be one of the most respected sites available, not by just providing you trading ideas one after the other every day just for the sake of it and not worry about what the whole picture is (too many web sites simply look at a chart and tell you to buy something and not give any regard to the whole picture. That is the wrong way to trade). Rebeltraders is about educating you, provide you with swing trade ideas, explain why we recommend a particular stock, help you protect your capital by teaching you the proper money management techniques, and help you become a better trader by understanding that the market is always right, we have to play by it's rules. When a trader tries to buck the rules of the market they will lose. A trader who think they will 'beat the system' will lose, a trader who thinks that "the market is wrong and I am right... will lose".


So many things Lisa and I want to teach and to do to help our readers and subscribers make money. Is is a passion and we put a lot of our time into this as it is becoming our dream to create something that people will want to have. What has been our biggest lesson to you so far... keeping you from trying to be in this market until their is a clear direction established. We will never tell you to buy a stock on the 'hope' the trade will work out. We will only provide stock trade ideas when the charts and the broad markets are supportive of a better chance the trade working. Trades that are based on plans will have a higher success rate then those that are based on hope.


Now today, early on we had employment data from ADP (which usually tracks the official government data when it comes out). The numbers from ADP were pointing to a further decline in the employment picture. This gave cause for the bulls to think that it would bolster the FOMC that they need to cut the Fed Funds rate. Then a short time later the market got the pending home sales data and it was much worse than expected. This actually gave the market a chill down the spine of everyone on the trading floor. It was a signal that things could be actually much worse and this was a shock to the system. The market became weaker on this news as the idea the economy was in worse trouble than thought. Then at 2pm the Beige Book (it is called the beige book simply for the color of the cover) was released and in it is a collection of comments and data collected from all of the different regions of the country. The general wording of the beige book today was that the FOMC does recognize the decline in the housing sector and also acknowledged the financial situation but they went on to say

"Outside of real estate, financial market turmoil had limited effect on economic
activity".

This kind of talk from the FOMC now increased the fear in the markets that there may not be a rate cut coming. I said last night that a rate cut has been priced into the market. The beige book took some of the air out of that idea and the markets reacted violently and sold off.


These are very bad times to be trying to be in the market swing trading.. Holding onto your cash safely tucked away while the markets establish a direction is actually putting you far ahead of those that are trying over and over to make a buck by trading in this mess. You are the winner here. Those in this market battling it out are losing.


Lisa and I have many things that we are discussing and the future of this web site will be something we all feel you will enjoy and the services we will offer when it becomes a paid subscription will be of exceptional value. But don't worry, when this market shows a sign of clear direction we will be posting our swing trade ideas here for all to see. Someone asked what the cost will be. That has not been established yet but it is our desire to be attractively priced! And the charter members of RebelTraders will enjoy the move over to the new site when that happens. It will not happen overnight, but it is being worked on. We want you to profit and we want to be the ones to help you do it.



Now for some charts: