The market trend is only your friend if you are in the market! - Andrew Baxter

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Market Trend, The trend is only your friend if you are in the market! Over the course of a trading week, there is a huge amount of data that flows around, most of it relevant in some context, some more important than other for stock market investing.  Two things that captured my attention last night was the move down in iron ore prices and the move up in the US market – opposite indicators, yet both seem to be having a similar effect!  The rising US market is making people nervous (albeit not the US consumer, who seems to be out in force) as is the drop in iron ore prices.

Let’s start by looking at the US – the world’s largest economy.  The Dow Jones index has continued its longest rally since 1996.  What that means, folks, is the stock market is going up.  However, how many out there remain unconvinced, arms folded and are wearing their Bearskin hats?

The thought of “better get out now, before it collapses!!” mindset reminds me of a former colleague who was about as positive and upbeat as a fairly severe case of haemorrhoids – gee how our trading team and I miss that every day!

Back to the Dow – now this is a tough one, as the experiences of 2008 and 2010 have significantly scarred many – both emotionally and financially and as a result, the action thresholds are higher.  In other words, because of the past, SO much more proof seems to be required to get stuck in, this time.  Now of course, this is not surprising as human nature is what it is, and hence why those who succeed in the markets have a unique psychology, when it comes to their trading decisions.

Odds are some of those not invested right now, will wait and wait, almost until the very end of the bull run, and finally click the trigger, just as the market pulls back, then reinforcing their decision to have stayed out – should have waited etc etc.  I sincerely hope that is not you, and you time your entry and management to be buying in on the dips, not running for the hills.

Then of course, in the meantime, those that have been in the thick of it for the past 6 months have a sufficient insulation of banked profits to be able to absorb a pullback in prices, again searching for another dip to buy into and make even more profit.

This is the familiar story that I have been writing about for months – the only way to get paid, is to be in the market, not out of it, so get stuck in!

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