the air is starting to feel a bit thin up here

• as mvw has suggested, i think the odds of a momentum blow off high are increasing...
• some of the primary oscillators i look at are overbought, the major indices are trading toward the upper trend lines, and we are entering the traditionally weak mid january period, yet the the major indices continue to grind up...
• a dangerous market for both shorts and longs...

9/30/2009 12:45 pm update

• just sold the last NQZ09 lot at 1716.50...
• for the swing trade: +14.25 NQ points/contract, 1 contract closed (1702.25 avg entry price)...
• for the day: +9.81 NQ points/contract, 3 contracts closed: +29.42 NQ points for the day...
• flat the NQ...
• NQ now green on the day, ES slightly red...
• MeVsWallstreet commented in an earlier post that he believes this move down may be a shakeout...i believe this as well...a close above the 1053ish pivot in the ES will increase my confidence in the shakeout concept...
• my original sell level for the first contract picked up during the chicago pmi based swoon, was at 1713.50...i changed it and was filled at 1709.50...
• my original sell level for the second contract picked up during the chicago pmi based swoon, was 1723.50...i changed it and was filled at 1716.50...
• both of these levels would have been hit, but my decision making process was being influenced by fear, and i lowered my exits...
• i cut my profit short by 4.00 NQ points on the first contract and 7.00 NQ points on the second contract...11.00 NQ points left on the table, for this series of trades...

Disclosure: Long ESZ09.

***remember this is an illustration of what i am trading and my thinking...my trading plan may change without notice...this is not a recommendation for you or anyone else, to buy or sell this or any other security...trade at your own risk***

Quiz: what emotions significantly influence trader/investor behavior and thus significantly influence how markets move?

in the middle of july, i posted the following quiz:

• when the average trader makes a decision to enter or exit a position, one of two emotions is probably dominant in the traders decision making process...what are the two emotions that the average trader might be keying off of?
• i believe that i engage in this process, a lot, especially when i daytrade...
• disclosure: this might be a trick question...

the usual pairing of fear and greed may come to mind...however, while i continue to believe that greed may influence the average person's desire to get involved in trading/investing in the capital markets, i don't believe that greed plays much of an influence in the decision making process of entering or exiting a position...rather i continue to believe that fear, and more specifically 'fear of missing' (the move up) and 'fear of losing' (during a move down), significantly influences all 'non trading master's' decision making process... i know it does mine...about a month or so ago, JE and i had a great phone conversation about this...

the folks at traderpsyches appear to have a similar viewpoint:

"...Many traders and investors work off “fundamentals” – i.e. company prospects or economic data. Many traders work off “facts” i.e. the actual price something is trading at and the relationship of that price to prices gone before (some may not think these are enough but they are indeed facts – the S&P is trading right this moment at 984.50 and that IS a fact) and we all can get caught up in the two kinds of fear that drive the market – fear of losing and fear of missing out..."

if you are interested in exploring this line of thinking, then check out the traderpsyches blog...

thanks again to Me vs. WallStreet for posting a link to their site on his blog...