Day Trading Alert – Beware the Sucker’s Rally!

 

Day Trading and Investing is challenging in the best of times. Those trying to learn how to day trade or invest discover something very early on in their (often short lived) careers:

The stock market is cruel, unsympathetic, and indifferent. It’s also an expensive instructor. Wall Street lures in new suckers every single day – chumps who fall for the siren song.

“Come on in, the water is FINE”

We’ve all been seduced by the Markets at least once in our lives. So why do we keep falling for their lies, over and over again? Right now, Wall Street is trying to lure us towards the rocky cliffs. And many of us, being the lemmings that we are, will smile as we walk over the edge.

Of course, when I say “we”, I mean “you” – as in you people who can’t think critically for yourselves.

The latest market rally seems to be setting up “buy and hold” investors for another bloodbath. Day traders just sit back and smile, thinking about the volatility that is right around the corner. The Dow is back over 10,000, the S&P is well over 1000 – it’s as if the markets are baiting investors into a trap. “Hurry, jump on the boat, before you MISS the recovery!” is Wall Streets latest sales pitch.

The question becomes – is this really the recover? Or the mother of all Bear Market Rallies? Do we REALLY think that the pain is over? Is it all butterflies, roses, and sunshine from here? You can decide for yourself, but for me, I don’t believe it. I’m not buying the hype, I’m not falling for the siren song.

Consider this: Since the March lows, the S&P is up over 60%. Do you really believe that there is that much more top-side above and beyond this? Can this thing really run for another 40%, 50%, or more? Or are we due for a major retracement/correction?

Considering the still flaccid state of the economy, my money is on a retracement. Of course, this introduces fabulous day trading opportunities, for those who know how to take advantage of market turbulence, especially in a falling market.

Also, while the residential real estate markets seem to be starting to stabilize and bottom out (MAYBE), we are just at the tip of the iceberg on the Commercial Real Estate meltdown.

Commercial Real Estate has tanked in the last year. But there is more pain just around the corner – much more. Look for further plummeting commercial real estate values over the next few years as the 5-year calls come due for properties financed in 2005, 2006, 2007, and 2008. Many of these properties were financed at 80% or higher, which means these loans are completely underwater now.

Do you remember how the markets reacted to the collapse of residential real estate? Expect more of the same following a similar (or worse) commercial real estate collapse.

So if you want to believe the market’s siren song, be my guest. I’ll be sitting here like a vulture, waiting to pick up the scraps of what is left of your investment portfolio.

The best way to protect yourself from market uncertainty is to not hold long-term investments in securities. In other words, by day trading, you protect your assets from long-term investment risk.

So act today, and learn how to trade – save yourself major pain tomorrow.

Oh, and one last thing – if you enjoyed this article (and you KNOW you did), share it with your friends on Digg, Stumbleupon, Twitter, and Facebook, so EVERYONE can enjoy it!

Get in, hit your target, get out…like you were never there

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