March Madness

While people are experiencing March Madness for the NCAA, the market has also been going crazy. We have finally started to see some consistent movement to the upside and some of it has come in very large movements. Nearly a 7% move on monday as the treasury announced it would purchase bad assets from banks.

My risk management and long bias has served well in this environment and the market is acting like it wants to move higher as well, if it holds the 800 level I think we will reach 850 in a short time. I currently have a 67% gain on the year, which monetarily isn't huge since my account got fairly depleted last year but my trading and discipline has done very well this year, letting winners run and taking profits at targets and cutting losses. The key now is to again maintain and try and keep producing positive returns consistently, this type of performance is likely not very sustainable but even if I can do 5% gains a month for the rest of the year I'll double my account.

I would like to see a solid test and hold of 800 then a resumption of the trend upward and I will look to take more risk to the long side. If we start to see improving economic conditions not to mention better than expected earnings we could see this rally continue for a while. Is it a bear rally? Technically yes until it exceeds the previous relative highs of 1650, it doesn't matter to me, you have to ride them while you can. Increased patience is probably one of the other big factors to the recent success, waiting for the good entry points. We'll see what happens going forward but if I remain smart and disciplined and patient I should actually have to owe money to the government at the end of the year, who would have thought that was good? ;-)