Stalemate

The Dow Jones Industrial Average continues to grudgingly head higher on very low end of year volume. This is occurring even as the leaders are beginning to break down. Many other leaders are still consolidating so we need to watch closely as they approach the 50 day moving average. A break on volume below this average will not be welcome. Before committing new money to new positions we must discover the direction of least resistance for the indexes. A move in either direction early in 2011 will give us our cue. Don’t guess just wait for the stock market to turn its next card. Profit comes from NOT forecasting the market (which is impossible) but reacting to the action as we see it each day.

The astute trader could play commodity stocks since they have been very powerful the last few months. I would not recommend commodity stocks in this blog because they are cyclical in nature and are hard to play. Growth stocks have a track record of increasing revenue and earnings. Commodity stocks are much harder to play being cyclical. These cyclical stocks can go from profit to heavy loss and back to profit in the blink of an eye. Cyclical stocks are tied very closely to the economy and currency swings and are not for the casual investor. Long term profits come from growth stocks which often trend longer term giving us greater chance of success in the stock market.

A number of my readers have been asking for more regular updates. To comment on the market on a daily basis is for day traders only, however I can understand the need for more information. For this reason I have started giving short concise comments on a more regular basis at http://twitter.com/rmhs my link is also on the left. Additionally I will continue to comment here as and when I consider necessary.