Do not let the market consume you

• Posted by vinaydh
• on December 21st, 2009

Technical analysis is not a science. It’s an art. If it were a science, someone or the other would have come up with an algorithm to corner the market. Nothing works all the time. I also use moving averages, trend lines, fibs, sector rotation and what not to form an opinion but there is no holy grail here. For shorter term predictions, some may use 5dma or 10dma or any other number. Guess what the price will bounce off one or the other dma. How intuitive? Some use trendlines. Now it’s a simple geometry concept that one can draw a line between any two points. How intuitive? Technical analysis is at best a random tool to interpret a random market. It all boils down to one’s gut instinct in the end. If one doesn’t have a good feel for the market then all is lost. In short relax and do not try to find the key to something that really doesn’t exist or this market will consume you. The trick is to keep it simple, do not over think and focus on a few things.

As for individual stocks $GOOG is looking good. Though there was huge selling on strength in  it on Friday. We will know more tomorrow. $AAPL and $AMZN too are in the process of turning a corner. I think most of the selling in these names was expiration related. $V too looks good on a pullback to around 83. The recent run up was due to its addition into $S&P and a pullback of some kind is likely. The last time it was at these levels it was a relentless dive to the downside but I think this time it should see 100 eventually. Semis too are on breakout path.

I think a breakout is likely but all this vacillation of the past few weeks has used up a lot of fire power so the robustness of any breakout is questionable. In short I am bullish in the very short term but not sure about the action in the beginning of 2010. I think the first 2 days of trading in 2010 will set the tone for the intermediate term. Till then it’s a hit and run environment.

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