In case you feel like you're suffering from whiplash from a market that seems to change its mind every day, or every few hours, you might want to relax just a little.
You may be experiencing a certain level of excitement one day only to have it turn into stress the next. But by looking at a simple daily chart of the Dow Jones Industrial Average it's easy to see that the last thirty days haven't been as bad as you may think they've been. In the last thirty days the DJIA hasn't penetrated the upper or lower Bollinger Bands and the RSI has stayed below 70 and above 30. While this is a market demonstrating a lot of volatility, it really hasn't ended up in over bought or over sold territory in the last thirty days.
So before I make the mistake of over trading my accounts, I always check the charts. I believe that stocks and averages can become over bought and over sold, but I also believe that stocks and markets can exhibit a lot of volatility at times. I've learned over the years that trading the extremes can often be lucrative for a nimble investor but trying to trade the normal market volatility can be devastating to an investor's portfolio.
Based on a review of the chart below, a smart investor would have moved out of the market during the first week of December and then moved back into the market at mid month. He would not have moved out of the market at the end of the month and therefore would not need to move back into the market today. A smart investor would buy only at the extreme points when the money is easiest to make and the probability is in his favor.
Good Luck and Good Trading.
You may be experiencing a certain level of excitement one day only to have it turn into stress the next. But by looking at a simple daily chart of the Dow Jones Industrial Average it's easy to see that the last thirty days haven't been as bad as you may think they've been. In the last thirty days the DJIA hasn't penetrated the upper or lower Bollinger Bands and the RSI has stayed below 70 and above 30. While this is a market demonstrating a lot of volatility, it really hasn't ended up in over bought or over sold territory in the last thirty days.
So before I make the mistake of over trading my accounts, I always check the charts. I believe that stocks and averages can become over bought and over sold, but I also believe that stocks and markets can exhibit a lot of volatility at times. I've learned over the years that trading the extremes can often be lucrative for a nimble investor but trying to trade the normal market volatility can be devastating to an investor's portfolio.
Based on a review of the chart below, a smart investor would have moved out of the market during the first week of December and then moved back into the market at mid month. He would not have moved out of the market at the end of the month and therefore would not need to move back into the market today. A smart investor would buy only at the extreme points when the money is easiest to make and the probability is in his favor.
Good Luck and Good Trading.
Daily Chart
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