Market Update - Tuesday May 12 2008

Wow what a day...It doesnt get more violent or exciting than this...However days like yesterday are the ones that have the capacity to wipe you out...Unless you practice real trading discipline. I for one did not even know that there were important numbers coming out - This is the importance of technical analysis and sticking to your trading plan. After I saw the big drop, I checked the news to see the shock news....Needless to say I was scared....As I said in earlier post I turned out to be quite early....If I had been a little bit more patient, I would have gained an extra 80 NF points or so - Both my short and long....I guess this is a problem a lot of traders have - Being trigger happy and overtrading a lot of times....Well...I guess for me it turned out okay yesterday...Cant win em all!

Coming to today....First the US market - Todays big gain came on very low volume....I dont like it one bit...It is distribution? I think it might be....Looks like they are pushing it up on very light volume...I have said this before - This is very very dangerous because when the volume finally comes in, we can accelarate to the downside....

When reading charts, 2 things are the most important - Price and Volume. Everything else are just derivatives of these!...Its surprising how many traders ignore this and try to find the holy grail of indicators which believe me just does not exist!

Okay now coming to our market today. I expect today we will get a flattish kind of day...Maybe some early strength and weakness later on...I am not very comfortable with the longs I took yesterday...So I will try to exit them at decent profits and then build shorts.....Again I stress, I will start in very very small amounts and then build on that...Ofcourse I will be hedged with options in the opposite direction.

Chart for today and comments added.

If you see above chart, where yesterdays decline stopped was almost picture perfect...We need to have a trading plan and stick to it...Keep emotions out...I simply cannot stress the importance of this...As I said before looking to exit longs today and build shorts slowly over the next couple of days....For today 5000/4980 on lower side and 5100/5150 on upside is very important.

Have a good trading day.

Best.

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I saw all the good comments and thank you for that...Please understand if I do not take time to respond to each and every one of them but I am reading them and I appreciate the same....

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