Trading 2009

2008 was a brutal bear market, with volatility up the sky; the DOW traded its largest daily swings ever. Lehman Brother's collapsed, yet other major banks found bailouts. The list goes on.

Here on the first trading day of 2009, the NASDAQ 100 traded up very nicely. Looking at the daily chart, we see that not only did the Q's break above prior resistance at 30.50 (the 61% retracement point from the November highs), but it closed above the 10,20,50 SMA. We also have convergence of these averages, which is important. This indicates the end of the market decline and the beggining of accumulation, the long process of healing. This type of market is subject to a long period of sideways movement; very much a range bound market. Also we have our first "long" signal from the DMI indicator. The crossing of the of the DM+ and DM-, as well as the ADX above 20 (though it is declining). I am not acting on this long signal, but it is the first real signal since August/September '08.

These are some promising signs that the world is not over and we will live to trade another day.

I started the trading year by closing out and posting profits from my short position I took on Citi. The stock has taken a beating, but has found good support. Come next week, I will most likely open another short put and let theta decay away.

Also, I have several stocks on my watch list that have also taken a beating, but have good potential for a fast rally this month. If these can show strength and break out, I'll take some small long positions with out/at the money calls.

2009 is all about managing risk and using what the market hands me to my advantage.