Today's Trades

Steve suggested I post the trades I did in the S&P 500 e-mini contracts today. You will notice that I was up about 3 points in the morning, then got impatient and gave it away during the light volume chop. In two trades I was stopped out with a 1-1/2 point loss each time.

I made it up in the afternoon to end the day up more than 6 points net of commissions. This is a report you can generate in TradeStation. If you want assistance finding and generating it, send Steve the request via email and he will cover it in the next webinar.

					Net Profit &
#	Type	Date/Time	Symbol	Price	Cum Net Prof
1	Sell	8/10/2009 8:47	ESU09	$1,004.75	$726.00
	Buy	8/10/2009 8:48	ESU09	$1,003.25
2	Buy	8/10/2009 8:52	ESU09	$1,004.75	$351.00
	Sell	8/10/2009 8:56	ESU09	$1,005.50
3	Sell	8/10/2009 9:00	ESU09	$1,004.50	$226.00
	Buy	8/10/2009 9:00	ESU09	$1,004.00
4	Buy	8/10/2009 9:22	ESU09	$1,004.75	$226.00
	Sell	8/10/2009 9:25	ESU09	$1,005.25
5	Sell	8/10/2009 9:33	ESU09	$1,006.25	$101.00
	Buy	8/10/2009 9:37	ESU09	$1,006.00
6	Sell	8/10/2009 9:56	ESU09	$1,005.75	($774.00)
	Buy	8/10/2009 10:04	ESU09	$1,007.25
7	Buy	8/10/2009 10:04	ESU09	$1,007.25	($774.00)
	Sell	8/10/2009 10:18	ESU09	$1,005.75
8	Sell	8/10/2009 10:18	ESU09	$1,005.75	$1,226.00
	Buy	8/10/2009 11:30	ESU09	$1,003.25
9	Sell	8/10/2009 12:56	ESU09	$1,001.50	$1,101.00
	Buy	8/10/2009 13:22	ESU09	$999.25
10	Buy	8/10/2009 13:56	ESU09	$1,001.50	$726.00
	Sell	8/10/2009 14:03	ESU09	$1,003.00
					$3,135.00

Some quick notes from the training session this morning:

Use the 5-day Moving Average on your daily charts for clear exit signals. Set your stops below the 5-day MA.

Use the 8/8 crossover on daily and intraday charts to do the same thing.

Use stop-loss orders; stopping out is your pay day. The 5-period Moving Average is valid for all time frames, but for more flexibility on intraday charts use the Donchian channel to avoid getting stopped out too quickly.

Use stop-losses instead of taking profits quickly. Ride the bull as long as you can, because he will try to buck you off. The market maker is doing that: he'll take the price back down to stop you out before he takes the price up.

In addition to intraday trades for short-term profits, be sure to trade the intermediate chart. This will prevent you from missing nice trending trades, even when you can't sit and watch the market intraday.

Keep in mind that our double-beta ETFs are leveraged plays, up and down. Leverage is great when it's going your way, but set your stops and get out when reversals come.

Your position size should never put you in a situation to lose more than 1% of your portfolio. Plan your trade size and stop-loss orders accordingly.

Use an intraday chart even if you can’t get real-time data--the 8/8 crossover will give you nice signals on getting back into a trend.

12th Straight Day

The NASDAQ rose for the 12th straight day today, gaining 47 points to close at 1973.60. The index is up an impressive 12.4% from its close of 1756.03 on July 10.

The Dow Jones Industrial Average rose 188 points in today's trading, retaking the 9000 level for the first time since January. The Dow closed today at 9069.29, a gain for the Big Board of almost 923 points since July 10, when it closed at 8146.52.  That's a gain of 11.3% in nine trading sessions.

The QLD closed today at $44.42, up 26.5% from July 10. The DDM is up 23.8%, closing at $32.92.  We recommend these double-beta ETFs for trading the market.

As Steve put it in this morning's commentary, "ride the bull for as long as possible by keeping stops underneath the rising 5 day moving average for short term trades, and an 8 or 10 day average for intermediate trend positions."

EBRI's Annual Retirement Confidence Survey

According to the Employee Benefit Research Institute (EBRI):

"Workers who say they are very confident about having enough money for a comfortable retirement this year hit the lowest level in 2009 (13 percent) since the Retirement Confidence Survey started asking the question in 1993, continuing a two-year decline. Retirees also posted a new low in confidence about having a financially secure retirement, with only 20 percent now saying they are very confident (down from 41 percent in 2007)."

EBRI also says less than half of those surveyed have any idea how much money they will need to retire comfortably:

"Many workers still do not have a good idea of how much they need to save for retirement.  Only 44 percent of workers report they and/or their spouse have tried to calculate how much money they will need to have saved by the time they retire—and an equal proportion (44 percent) simply guess at how much they will need for a comfortable retirement."

Unfortunately, an astounding 53% have less than $25,000 in savings and investment. Fully 76% of those responding to the survey reported having less than $100,000 put away for retirement.  So, regardless of how much they think they need, few respondents have much at all put aside for retirement.

There has never been a more urgent need for successful investing to rebuild the account values ravaged by last year's market decline.

Read the entire report at 

http://www.ebri.org/pdf/briefspdf/EBRI_IB_4-2009_RCS1.pdf

Trade the Trend

Very powerful training session this morning. One point that hit home is we must trade with the trend. Fighting the trend is like swimming upstream in a swift river.

The question all investors need to answer for themselves is this: Which trend do I want to follow? Short-, intermediate- or long-term trend?

Steve showed us how to use the 5-day moving average and the price channel as stops in the current intermediate trend, and how the 5-day gives us a great exit point during the initial phase of this intermediate advance. The price channel will give us more lattitude when the short-term cycle chop begins.

DDM and QLD Continue to Move Up, Are You? Paper Trade to Gain Confidence.

From this morning's commentary:

"We don't trade against the magenta line (intermediate), even when shorter term cycles look like they are due to decline. We use their weakness instead, to add to long positions...The reason is that big money keeps buying the dips...when I start pointing out how an intermediate cycle has been in a 4-5 week decline that typically only lasts 4-6 weeks, then you have to be ready knowing that some kind of alarm is going to be triggered inside the institutional brain, and they are going to wake up and push the buy button. It happens all the time, several times a year."

Shares of the DDM, our preferred Dow double-beta tracking stock, are up $5.31, or 20%, from their July 10 close. Shares of the QLD, the NASDAQ double-beta tracking stock we use, are up $6.75 (19.2%) during the same period.

Some of you are still on the sidelines during this nice market rally. We had a question from a student some time ago that merits repeating here. She came up after a live training session and asked, "How do I get over the fear of making a bad decision?"

"Through learning and practice," we replied. She was involved in learning already, so we went on to discuss paper trading, and how important it is to use paper trading tools available through your discount broker to practice everything you learn about investing BEFORE you commit any money to a new technique or strategy. Repetition anchors your understanding and leads to confidence.

We hope you are actively investing, and if not, that you are paper trading the insights Steve provides on the site each day. Once you have the confidence that you understand how to invest properly, then you can commit money to the market without fear. You'll never look back.

Already we've had very nice feedback from subscribers who are enrolled in Steve's current training series, which began yesterday. If you would like to take advantage of this opportunity, contact us through the website at TheMarketForecast.com. The first session yesterday is available in the archive for attendees to review.

Are You Conventional?

We recently discussed the flaws in using only history to make investing decisions. Stock market prediction is particularly difficult when investors compound the error using shaky assumptions. Writing in the weekend Wall Street Journal, Tom Lauricella discusses one typical mistake:

"Even though stocks are down about 40% from their peak, the conventional wisdom is that investors should have stuck to their long-term plan and not responded to the market downdraft. But a growing number of advisers think that's foolish...'Historically we know there are periods where you could lose a decade's worth of returns,' says David Lucca, a partner at Dallas-based Rhoads Lucca Capital Management. 'Why would you follow the conventional wisdom?'...

"'The wiser thing is to be prudent,' he says. 'To say I don't care what happens to my money today, maybe in ten years it will be better, doesn't make any sense.'"

Read the full article at

http://online.wsj.com/article/SB124795660287062371.html