China capping its annual rare earth output.

An interesting article just came out today on China capping its annual rare earth output, as it controls 97% of the rare earth materials market:
http://www.reuters.com/article/2011/03/31/china-rareearths-idUSL3E7EV0WZ20110331

Now.

The path of least resistance is up for now.

note: for educational purpose only

Miro's Studio

Positions are on, so we need to sit tight and follow the plan. Sitting is easier when we do something else while waiting for potential profits to realize.

Is there a viable way to trade gaps ?

Note: for educational purpose only, "gaps"

Be prudent about the risks you take, but don't be paralyzed by fear of failure.

What is your set-up ?

The lizard ... just hangs around on the rock ... and waits and waits and waits ... for his pattern to show up ... and when a bug comes along, he makes his move, right from the gut, without thinking about it. 
Ed Seykota on setups

Moral: When trader becomes that automatic, then he, too, can hang around on a rock and catch a lot of bugs.

Backing and Filling time.

Backing and Filling at this stage is very possible scenario. Backing and Filling leads to Consolidations, and Consolidations lead to Breakouts, and Breakouts lead to Trends.

Patience.

We need to be patient here and not get caught up in this reflex bounce, keep your cash ready and wait for new opportunity to present itself.  Watching and waiting is hard to do, but very important part of successful trading.

sideways 2011

Where are we now ?

The markets are down around 7% for now. Correction around 10 % would not be out of line with historical precedent.

Panic in the market.

Gap downs in stocks, commodities, and precious metals in the U.S. market that we are seeing are short lived during such crises situations. Looking back at history, this is true going back many decades.

Learn how to profit from stocks that go down.

The happy times in the stock market are interrupted once in a while by periods of gloom. Yes, if you look back at  history, the good times always return, but a lot of money always gets left on the table by people who refuse to play the short side. Learn how to short.

an idea, all time high

RVC.V

Always remember, the idea is not the same as the plan.

This is not a recommendation to buy ,sell or hold any securities.

Market experienced around 5% correction.

Re-read the blog,  What do I have to do now ? 

Run screens and isolate stocks that are gone down the least verses the market and put them on your watch list. When the market reverses to the upside these are the names that will potentially become the strongest stocks.

Winners Never Quit, Quitters Never Win

"Our greatest glory consists not in never falling, but in rising every time we fall. "

Author: Confucius  

" approach first, method second "

“As to the methods there may be a million and then some, but principles are few. The man who grasps principles can successfully select his own methods. The man who tries methods, ignoring principles, is sure to have trouble.”

 - Ralph Waldo Emerson (1803-1882)

You first have to start with the principles of trading. " The Approach "

What do I have to do now ?

Prepare

Isolating strong stocks when the market is weakest is a very simple idea that works. When most everything in the market is getting trashed, look for the stocks that refuse to go down. There has to be a reason for it. When the market resolves itself back to the upside, these are the names that will potentially become the strongest stocks very quickly.

Observe

Markets Now

Is the cash the wisest play now ?

All we know is that until we see improved leadership and constructive price and volume action in the major averages we will remain defensive.

As always, markets can change with little notice.

Stay alert.

Truth

The market does what the market does, and that is the simple truth to the matter.

One of the great myths of the stock market is that you have to be in the market all the time in order to be successful. In my view, this is simply not true. There are times when it is appropriate to be heavily invested, and there will be times when the market direction is not so obvious. During such an environment, being out of the market and in cash may be the wisest play.

Passion

This blog intention is to help focus and capture the thinking and doing of an experienced trader and help few people in the process. This is a selfish affair as I have noticed in my life when I focus on helping others my life just flows, and at other times when I focus exclusively on myself everything is hard for me.
I've been around the block a few times, and been trading for over 15 years, made thousands of trades, and made and lost millions of dollars in the process. Over the years, I have had my share of hundred thousand dollars up days but, unfortunately, I have also suffered through periods of harsh failure during which I have lost essentially everything. There are some fundamental truths that are straightforward, but take one long time to internalize and use for one's own good. Follow the trend, let your profits run, cut your losses while small, and manage your money so you can stay in the game long enough to make significant money, are few truths we need to learn.
One needs to keep in mind that one will never reach a true understanding of anything just by being told by another, no mater who does the telling. You can only truly understand, and thus have faith in truth of your understanding, when you see and experience for yourself.
You are going to have to do it your way. No other way, until you learn to do it the way, which is a process of trying your way and failing, and not giving up.
I can only hope to help some of you in your process towards your fullest potential.

A Passion for the Truth is the key element of a sound approach to trading and life.