Wednesday, August 03, 2011

Market conditions and future direction, etc.

A note to readers, the stock market itself is looking shaky lately. The budget deal was signed by Obama, then bad economic numbers and forecasts turned up. Perhaps the highs of May or so were a top of sorts. If things continue to worsen, it might spell trouble ahead for the Dow.

It might be thought that in the Cheapie stock arena that the possibility of a Bear run is not a big deal, as unlike "real" stocks, pennies are not so much in lock-step with the major indexes.

I have found that in practice to be incorrect, as the novice and sucker crowd is into the pennies during Bull runs, which means less action is found in them during market downturns, and consequently fewer stock promoters and their backers are willing to mount expensive mailer campaigns, and even the e-mail spamming takes a hit of sorts.

The folks reading this blog are not the sucker type traders I am referring to, those are the folks who actually believe in spam ads and buy stocks long as an investment strategy, not as a day trade or swing with knowledge of the possibility of pumpers dumping suddenly yielding a short, or buying on momentum, etc.

You have probably noticed fewer Supernovae and other choice plays listed on the watch list, this is a common sign of a market not providing a lot of action, which happens during suspicious and weak markets.

It's interesting that the best SHORTS (for pennies) often occur during Bull runs, not Bear ones! This is related to the reasons I gave above, probably. A raging Bull run has nice breakout longs AND choice shorts.

My advice is to be overly choosy at this point about when and what you trade, staying patient. Once the market turns back up, more and better plays are likely to follow...

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