Stock Market Review 9/5/2011

Evening folks. Here is a look at market indexes  for next week.  Overall the market made no push last week as it ended up flat to slightly negative.  We had a great start to the week culminating with a nasty 2 day selloff on thursday and friday.  At this point it looks like we are going to test the bottom of the range that we have been in the past month. It looks like the nice rally we had was just an oversold bounce/shortsqueeze/end of month window dressing rally.   Once we got our first signals of overbought and near some resistance points we sold off in style.  At this point being defensive is best as the trend is down for now. Even for those that have longer swing styles that could go out a month its best to be defensive.  The name of the game is capital preservation….last thing you want is big drawdowns in your account as there will be  atime soon enough to get aggressive but you will need cash to do it!  I know a lot of you guys are holding some dead dogs in your accounts resorting to all sorts of prayer to get your money back.  Never lose more then 10% on a trade its not worth it. Trading is all about opportunity cost.  If you got 1/3 of your account tied up in stocks that just keep going down and you take 6 months to get your money back to 0 then yes you technically didnt lose money.  But in my mind I would think you just lost 1/3 of your account because if you were daytraidng it or waiting for the right time to aggressively swing that money you would double that money anyways! so in the end you lose.