1/3/06 Pre-Market notes

...Futures up strong this morning. Looks like the market wants to get 2006 off to a good start.
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...Another great Jim Jubak article over on the MSN Money site. Mr. Jubak gives a lot of pertinent trading advice in this article. The points he makes are consistent with what I have learned over the years. Most of the things he talks about in the article are mechanical in nature, handling risk, going with the flow, etc. It's a great read and well worth the time. And for 2005 Mr. Jubak's Pick's Portfolio was up cool 33%. As I've said before, one could do a lot worse than just using his picks.
...What he doesn't get into that also relates to system building and handling trades is the emotional aspect of trading. I have found over the years that I am the weak link in my system. When I trade emotionally, I get beat. It is pretty much that simple. The market is masterful at playing off the emotional reactions of us little guys and taking our money. Trading isn't rocket science. There are mechanical setups that yield profits over time if you have the patience and discipline to wait for them, the courage to act on them when the setup occurs, then the patience and discipline once again to hold steady until the trade completes one way or the other. I can't tell you how many times I have sold out of a position on an intra-day dump just to see it turn around and end up doing what I thought it would all along, only without me in it. And I confess I still do that sometimes, and that frustrates the daylights out of me when I let that happen.
...One reason that I have always thought that a Christian should be able to trade well is that the two most widely recognized emotions on Wall Street are fear and greed. A Christian should not be controlled by either.
...Also worth reading today is Louis Navellier's MarketMail. MarketMail is a FREE weekly newsletter issued by Mr. Navellier and is quite a bargain at that price, IMO (g). I have followed Mr. Navellier for years. In this issue he is uncharacteristically frustrated by of all things, what he considers inaccurate reporting by the news media regarding the reported interest rate yield inversion. The article is worth reading for Mr. Navellier's explanation of yields, why they matter, and how the news media is getting it wrong, and why that is affecting the markets. It is unusual IMO to see Mr. Navellier this frustrated and pessimistic. I subscribe to his newsletter because I do respect his opinions and his usually optimistic focus differs from my own and a lot of the other stuff I regularly read. I sometimes like to read things from people who see sunny days at the beach while I'm looking for storm clouds - balance, you know?