It's 2010...Time to Trade the Trend...I Dare You...

Happy 2010! A New Year and a New Decade! I regularly receive emails, cards and letters from individuals who tell me that what I teach and how I teach makes a difference in their life and in their trading. Here are two that I received just before Christmas that I would like to share: “Just wanted to take a moment to thank you for all of your guidance and support throughout the year. It has been the best year of trading for me by far because of your education on all aspects of trading. “I couldn’t imagine having a better mentor than you. I am always amazed and impressed by your dedication, consistency, and ability to educate your students. “You have truly had an enormous impact on my life. Thank you.” RY “What a tremendous year this has been for us— “R____ and I feel so blessed and honored to have been in your tutelage for most of the past year! Because of you, both of our trading careers have improved ten fold!! “Thank you for being the most generous and knowledgeable instructor we have ever met.” LF Even though both of these individuals graciously acknowledge the contribution of “a darn good looking” :) teacher, the major reason that they found success is because they actually DID what they learned. Many of you have seen me instruct workshop participants to write down in their notes that their responsibility is to LISTEN and DO. In other words, a teacher can teach until the cows come home, until a blue moon occurs or until he is blue in the face, but it is when and only when the trader does what they have been taught that they get the results. In both these cases these traders did it. They took action. They followed rules. They made it happen. Congratulations! If you want to have a great 2010 please read on… The SPX rose from 903.25 on Dec 31, 2008 to 1,115.13 on Dec 31, 2009. This was an increase of 23.45%. I think most market commentators were surprised by the gain in 2009. In fact if you go back and read what many were saying at the end of January you would have to conclude not only did many not forecast a double digit rise, many were looking for a down year, citing the January Barometer. I don’t like the January Barometer! Why? Because I believe it, other statistics and clichés are myopic and highly misleading to investors and traders. This is not a new found opinion, just read what I wrote on Jan 31, 2009 by clicking here: http://chartsignals.blogspot.com/2009_01_01_archive.html As a matter of fact, just go ahead and PRINT the Jan 31, 2009 post and post it by your computer as a constant reminder of what really is important. When something is misleading it generally costs trader's money in lost principle, lost profits or both. I do what I do to help traders and investors make money, not lose money. Why? Because over the past 30 plus years I’ve found that people can lose money on their own just fine. They don’t need a professional to help them lose money. I believe that traders turn to professionals to help them do better, not to do as bad, or worse than they can do on their own. Unfortunately, there are too many who share their myopic but clever sounding opinions to ultimate disappointment of many traders. Dave’s Insight: Most people lose money on their own just fine. They don’t need professional help to lose money. Most of you know that I have been teaching for years that the trend is the most important technical factor in trading and that anything like the January Barometer, clichés or opinions that distract you from trading the trend can be harmful to your wealth. So do yourself a favor in 2010, trade the trend. While many were surprised by the 23.45% SPX return in 2009 there was actually a 35% or a one out of three probability based the prior 20 years (1989 -2008) that a 20%+ return could occur. If you round up the 1999 SPX return to 20% that probability increases to 40%. SPX Returns 1989 +27.25% 1991 +26.31% 1995 +34.11% 1995 +20.26% 1997 +31.01% 1998 +26.67% 1999 +19.53% 2003 +26.38% Here’s is the really important part. You didn’t need to have any idea that the probabilities were actually 40% for a 20% plus return if you would have simply traded the trend as I emphatically encouraged you to do on Jan 31, 2009. Here’s the good news for 2010…You still don’t have to have any idea in the world what the SPX return for the upcoming year will be if you just trade the trend. Dave’s Insight: To trade profitably focus on trend, support and resistance and momentum. Dave's Insight: To improve your trade thinking...Stop reading and listening to people who distract you from the trend. Oh, by the way in case you didn’t know there were 72 stocks that finished the year between $25 and $250 and had one million shares or more average volume during the past 30 days that rose by 100% plus in 2009. If you include stocks less than $25 and more than $250 and/or with trading volume less than one million shares the number with 100% gains in 2009 is even higher. Here are the Top 25 Stocks* between $25 - $250 with one million plus average volume and their return for 2009. How many of these stocks did you trade this past year? It would surprise me if you didn't trade at least one on this list. Top 25 Stocks in 2009* Stock Return HGSI 1,342% RINO 690% TCK 610% TSL 480% DNDN 473% IOC 458% CSIQ 346% WLT 335% OSK 316% WDC 285% JCG 266% CREE 255% GFA 253% FCX 228% GMCR 215% EXPE 212% MEE 208% BUCY 205% SNDK 201% PXD 198% JWN 190% WFMI 190% GES 179% MWV 170% ANR 167% I Dare YOU to make a Commitment to yourself to Trade the Trend in 2010! Best of Success in 2010...Dave