Playing the market

By Gus Cosio

A lot of market players are likely asking themselves if we are still in a bull market. For people who play the market by way of scalping or stagging individual stocks, price movement of the last few days can be very daunting. Anyone would be very lucky if he went long and made money. The difficulty about short term traders is they tend to chase prices both on the rise and then on the fall. The only ones who are successful doing this strategy most of the time are broker-dealers in the exchange simply because they are immersed in the stocks they trade the whole time. Also, they have no friction cost on their trade.

For the average individual, one has to be more circumspect. Investment horizons should be longer which really means one should not expect a quick profit on every trade, but be thankful for every opportunity when it happens. Today, in spite of the recent weakness in share prices, it may not be too risky to do some cherry picking provided that your investment horizon is not too short. Of course, the adage is that one should not try to catch a falling knife. Nevertheless, after this decline starts to show signs of stabilizing which to my mind it has, it would be good to be long in positions.

Yesterday's price movements were very encouraging; my view is that after a number of days of declines, the market is starting to turn. I would stick to strong rather than speculative stocks because that is where the money is going. I've always believed in following the money flow particularly in bullish trends such as what we have.