DOW 10,000…2009

The averages seem to be overdone. The bears call for a correction, the bulls call it a cautiously optimistic market. Still, the market holds the opinion that matters the most, and the market keeps heading higher.

Day traders often get mistaken for gamblers. I don’t believe this to be the case. Put your money into the market. If you’re a gambler, leave it there unattended. If you’re a trader, take it off the table as you please. For profit or to protect yourself from losses.

The reason I mention the gambler is that most at this lofty level in the indexes believe that the gamble is over. That the odds of this run continuing are poor. I happen to believe this as well, yet I’ve been told a simple story that is more applicable than the luck of gambling.

If a coin is flipped 500 times, lets say 3550 times (the move in the DOW from the March lows), and oddly the first 100 times the coin is flipped it reads heads. A gambler will bet it flips tails the next flip. A trader will bet heads, and that is simply what we have going on right now in the DOW. The trade is long the averages until it is not.

The bears say the future is tails, the bulls point to the board and say it reads heads. I believe that this rally is long in the tooth and believe that there will be a culminating event that either justifies this inflated move, or humbles it. The one thing that is more difficult to determine than the direction in the market is the timing of this turning point. A day trader has to trade the now not the future. Timing is the key.