I HATE YOU, MR. MARKET

Actually, I don't hate the market. I hate all the wimps who panic and sell with every little bit of news that comes out.

If you read this blog at all, you know that just about every time my portfolio makes a yearly high, I end up giving a bunch back. I get a knot in my stomach whenever I start to make money, because I know I'm about to get my butt kicked. The last couple of days are a prime example. Tuesday I was up 53%. Today (so far) I'm at 42%.

Whenever I get the wind knocked out of me, it causes me to rethink what I am doing. So, I probably learn a lot more from losing than I do from winning.

One of the mantras of traders is to never trade against the tape--meaning the broad market really controls everything. It's hard to make money when no one else is.

The problem is, you never know if things are headed higher, or if they're about to crumble. But there are indicators out there that are extremely helpful in determining what's going on behind the scenes.

Here is a simple chart that helps give me an idea about what's going on. I first saw this kind of chart on Pitbull Investor which is an awesome site that offers some really great tools for very little money.
The chart uses simple moving averages but it gives me a nice picture of the market. If I would have used this chart in making buying decisions over the last 3 months, I would be a lot better off today than I am. If I wouldn't have made any buys after October 22nd, I'd be sitting on about 50% instead of near 40%. I could have avoided a 20% drawdown in August if I would have quit buying around August 1st.

Part of my problem over the past 4 years has been my inability to be patient and wait for the productive times while sitting out the nasty ones. Maybe this thrashing will slap me around enough to create a change in my trading. We'll see.

There are amazing tools out there for free that would have costs thousands of dollars a few years ago. I need to use them better.