Saturday, June 02, 2007

The Right Side of the Market

"There is only one side to the stock market;....not the bull side or the bear side, but the right side. It took me longer to get that general principle fixed firmly in my mind than it did most of the more technical phases of the game of stock market speculation."

--Jesse Livermore

I pulled out this out in response to the e-mails I've received over the past month asking why I don't have any shorts in my watchlist and have been trading almost exclusively from the long side. Some have gone on to detail why the market "should not" be hitting highs, pointing to all sorts of economic stats and principles.

Guess what fellas . . . I agree that the economy stinks right now. I do believe that Mr. Bush and his cronies have caused irreparable damage to democracy, the constitution, the economy, individual rights, the poor, the middle class and foreign relations that will have long lasting consequences. I do think the market is overextended and due for a future correction, or even something more menacing. To put it mildly, I think the U.S. is a mess.

However, I am not going to let any of that stop me from participating in this bull run. I am going to ignore all of the economics stats and follow the trend, adhere to my setups and support and resistance levels, and place prudent stops. Short term traders don't make money by making macro-economic predictions. We make it by adhering to what the charts tell us.

At some point, the run will end and I will take some losses when it does. However, those losses should be small, as long as I adhere to my stops, and will be more than offset gains I am making now.

I don't care to be a bull or a bear. I just wanna be right.

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