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It isn't always me

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I probably get over 100 e-mails per day from subscribers that are asking about a stock and potential trade. There's no way I can respond to each. I do try and cover a few from time to time in the market monitor and OptionInvestor.com.

Some subscribers are actually taking what they've "learned" from past commentary and venturing from the nest time to time on their own. The "common" e-mail is that "I took a nice profit but I closed the position too soon."

Gosh darn it! If the trade hits your target, or triggers the stop you had defined BEFORE you initiated the trade, then you planned the trade and traded the plan. You were disciplined and that's the sign of a good trader.

Sometimes when a trader is trying to recover from a year where they perhaps "learned the hard way" and just traded to trade, you've got to take some gains and get the confidence back. It doesn't happen overnight, in a day or even a weak.

As you get that confidence back with some "small profits" and perhaps "selling too soon" you're going to build some profits in the account that allow you to perhaps give a trade a little more time to work.

Stocks now lower

A day isn't long enough nor is an hour to write all that is going on in the markets.

In this morning's pre-market action in the market monitor on OptionInvestor.com my first post mentioned the thought that stock traders were most likely going to sell some stocks into the weekend as tensions in the Middle East still have many not wanting to carry a lot of risk over a two-day period.

There were hints of this in the bond market as YIELDS were pegged near their lows found yesterday. For the past couple of days we've noted the benchmark 10-year YIELD ($TNX.X) looked ready to roll over a bit and that the potential buying pressure building up there may have had stocks at risk as money flows toward the safety of the U.S. Treasury bond market.

10-year YIELD Chart - Daily Interval

If you think most technology stocks have been weak up to now, then one has to be getting nervous when they see cash start rolling into the Treasuries. A stock that didn't find some buying as treasuries got sold, hints that there was little bullish money going into the stock to begin with. If money continues to rotate back into treasuries, then weak stocks showing poor relative strength versus the broader market that trades below trend should find more eager sellers and lack of buyers. Good shorts still to be had in the tech sector.

In today's market monitor, I made note that according to Dorsey Wright and Associates, the Semiconductor bullish percent indicator went back into "bear confirmed" status. Bulls in the group should be writing covered calls or looking to snug up stops in the sector. This has been the strongest group in technology, but we are now seeing some internal weakness and sell signals generated.

Jeff Bailey
Senior Market Technician
Option Investor

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