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SITM Monthly Jan 2009
Welcome back to Safety in the Market in 2009 as we kick off the year! At the time of writing the markets have given back the Christmas and New Years gains, as Wall Street and Commodities sell off on the renewed concerns of a recession that no one is sure how long or deep it will be.
The benefit to trading rather than investing is you can start the year with a fresh mindset armed with the multiple possibilities being long or short can bring. For the traditional investor, the year will have mostly started on the back foot as they ponder how they can rebuild the last capital the markets tore away from them last year.
The Christmas period provided a brief rally and many traders had the chance to get long the markets as many good ABC trades were signaled. The setups to the long side have been a rare site in 2008, so it does show the fact markets can see sustained runs in both directions and the need to be on the game to maximize the results.
The major influence that continues to drag over the global economy is how far will the US economy fall and how robust will the likes of China be. The change of government in the US will bring a new focus and may act as a factor in finding a bottom in this market. I see the chance the market will test the lows of November 21st of last year and they will act as a strong sign of how this year will play out. Confidence is on a knives edge and the effects of the slowdown are starting to bite into the real economy. The prospects of job losses are also weighing heavily on the investors’ minds.
One vital thing to remember is the markets are forward thinking and are ahead of the real economy. So when the bottom is found, it will start to make its recovery long before the good news hits the streets. This is where being on top of your trading plan and the markets themselves can give you a leg up on those still wondering when things will improve.
In 2009 Safety in the Market celebrates 20 years of delivering trading education. We are very proud of the work that has been achieved to date and we look forward to rolling out a number of new initiatives this year to keep you developing and honing your trading skills.
Whatever the year holds there will be opportunities for profits, I wish you the best in capturing them
Aaron Lynch
Good Trading
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