Good Morning!
It’s Friday!
TGIF!!!
YIPPEEE!!!!
DOW posted spectacular gains last night, which fueled by positive earnings results from AT&T and Amazon. Last night marked the highest year for the year.
“Earnings are showing in many cases that companies are increasing their bottom lines with lower revenue, which means that corporate management is taking responsible cost cutting steps to navigate the economic downturn,” said Michael Farr, president of money
manager Farr Miller & Washington; “this will prepare them to recover strongly on any economic upturn.”
Looks like positive sentiment is in the air.
Hence, I’m sure a lot of traders who didn’t held their position overnight is likely to bang tables while those who have endured the emotional upheaval of holding their position are celebrating right now.
So, Market Psychology wise… What’s likely to happen?
The moment the market opens, CHEONG AH!!! (Hokkien: Run for it!)
Hence, if the market rally, it is expected. Note that Asian markets are likely to gap up, which already priced in the gains in Dow. However, average investors wouldn’t think likewise and would just jump in to buy. If the market doesn’t edge higher, something is wrong. Who is selling? If it breaks OP, what do you think will happen to those who bought today? Lose $$$ right? Good chance, profit taking will happen in the morning.
Of cos, I wouldn’t know what’s the extent of the profit taking. All I know is since today is Friday, many investors may be reluctant to hold positions overnight and may want to reduce their holdings so as to enjoy their “holiday”.
The key is OP. Hence if your counters are trading above OP, good for you. If not, May be it is prudent to reduce your position.
After all, Trading is all about capital preservation. He who has the “ammo” to fight the protracted war will have the last laugh!
CK
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