OPENING POSITION
December 2001
As we get ready to wind down for the year,
it's only natural to reflect on the events that have taken place. And it's
been quite a year. It started out as a difficult one for the stock markets
and the economy in general. It ended up being one that was far worse, not
just financially, but emotionally, and for all citizens of the world. The
attack on America by terrorists on September 11 started a domino effect,
affecting private corporations all over the world, many of which had already
been experiencing financial problems. This in turn brought the markets
down even further. For a moment, following the US attacks on Afghanistan,
there were subtle signs of a strengthening of consumer confidence. Whatever
the cause of that lift was - patriotism or anything else - it was short-lived.
Now, as I write this, we are confronted with yet another deadly threat
- bioterrorism.
These are uncertain times, and there's no knowing how long this will go on. We are seeing signs of hostility intensifying between nations that have long been involved in conflict. And if this continues, it's likely that a recovery is far out in the future - too far out to worry about making long-term investments. What other options are there?
In the STOCKS & COMMODITIES interview this month, we talked with John Clayburg, an expert on developing trading systems, who was in New York City in the financial district on the day of the attacks and had a front-row seat to the tragedy. Find out what his thoughts are about what type of strategies need to be implemented during such times and what we can expect going forward. In this issue, we have also included an article by Kevin Lund and Tom Gentile on options repair strategies that you can use to fix your shattered positions.
Those repair strategies mentioned are not only useful during troubled times; they will always come in handy, even after the markets resume their normalcy. And they will. But until then, if you are going to participate in the markets, the best insurance you can have is to stick with short-term trading strategies such as key reversal patterns, discussed in Massimiliano Scorpio's article, starting on page 64.
But most important, be brave. Although the feelings of fear may be prevalent today, don't let them dampen your holiday season. Happy holidays to you and yours.
Jayanthi Gopalakrishnan,
Editor
Excerpted from an article originally published in the December 2001 issue of Technical Analysis of STOCKS & COMMODITIES magazine. All rights reserved. © Copyright 2001, Technical Analysis, Inc.