Friday, December 22, 2006

Tighten the purse strings and advice from Rocky Balboa

"Don't focus on making money; focus on protecting what you have. "

--Paul Tudor Jones--

The market is at a crossroads right now, with all of the major indices at key levels heading into the new year. I will be following Mr. Jones advice and playing it very cautiously. While I will continue to trade, I will play it much safer. Unless I see something that moves me to make a big play, I will most likely use smaller position sizes with high risk reward and tight stops. Today's position in GLD is a good example.

My main concern with the current state of the market is the fact that semis, transports and breadth are not confirming new highs. Couple that with the fact that money is flowing out of momentum plays (AAPL, AKAM) and into safe stocks like GE, and you can see why it might be time to tighten the purse strings a bit.

While these are legit concerns, I won't let them paralyze me from putting on trades. However, they will be on the back of my mind and effect my risk and position sizing.

Here is from sage advice about life that could be applied to the markets from Rocky Balboa:

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