OPENING POSITION
January 2003
As I write this, 2002 is drawing to a close, and it is only natural for us to look at the markets to see if they give any indication of what we can expect in 2003. Perhaps the rally that started in October convinced many investors that the bottom had been hit and the markets were due to turn around. Or maybe it was the interest rate cut by the Federal Reserve on November 6 that generated a short rally. Whatever the reason for the recent excitement, a look at the broader markets suggests they are still in a downtrend. On the bright side, though, the downtrend has been adhering to a significant support level. The markets have been seesawing between that and a resistance level. But the question is: Will the markets break through support or resistance?
Until one of these levels gets broken, there's no telling which direction the market will go. Because of this, I have to agree with Federal Reserve Board chairman Alan Greenspan's comment about the economy reaching a "soft spot." I just hope it doesn't get much softer - the possibility of deflation could get too close for comfort.
That does all of this mean for traders? Maybe it means you should focus on markets that are showing a definite trend. You'll find some strong trends in the commodities markets. Or maybe it means you should take a break and reanalyze your trading system. Does it generate effective buy and sell signals? In this issue of STOCKS & COMMODITIES, Guy Brys and Luc van Hof present an effective measure for your buy and sell signals in their article, "A Nonparametric Performance Measure." If you don't use a trading system but want to build one, the S&C interview this month, with John Hill of Futures Truth (which starts on page 76), will tell you what you should look for when you're creating or purchasing a trading system. Or perhaps you want to wipe out all past bad trading experiences and, as Adrienne Toghraie suggests in her article on page 70, make a fresh start. Not a bad idea as we begin the New Year.
Last but not least, I would like to take this opportunity to remind you that voting for the annual S&C Readers' Choice Awards has begun. Please take a moment and visit our website at www.Traders.com to cast your votes. Ten random voters will be selected to receive a Professional Traders' Starter Kit - which includes S&C On CD and five years' subscription to STOCKS & COMMODITIES, Working Money, and Traders.com Advantage. The deadline to vote is January 15, 2003. I encourage all of you to participate, because your input is important. Isn't that a great way to start off 2003?
Happy New Year!
Jayanthi Gopalakrishnan,
Editor
Originally published in the January 2003 issue of Technical Analysis of STOCKS & COMMODITIES magazine. All rights reserved. © Copyright 2002, Technical Analysis, Inc.