3 Steps for Surviving the Summer Trading Madness
by Michael Shulman 07/27/09
Free Trading Guides
We are dealing with a mad, mad market.
In an op-ed piece in the Wall Street Journal, Fed Chairman Ben Bernanke tells the world that he will keep interest rates low and still control inflation. The bond market yawns. He says the same exact thing to Congress the following day, and bonds rally and interest rates fall.
Wells Fargo (WFC) issues miserable data with its "record" earnings announcement, and the stock sells off a bit. But no one points out that the company refuses to have a live conference call to discuss anything, or questions how the company is going to support the portion of the more than $1.5 trillion in off-balance-sheet assets that will hit the balance sheet in January due to an upcoming change in accounting rules.
Meanwhile, Gilead Sciences (GILD) reports blowout earnings and double-digit growth -- not to mention that it has yet to see the full impact of world's concern over swine flu -- and the stock sells off.
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Simply madness.
How to Trade the Madness
You have a few options when it comes to trading this madness:
1. Don't trade.
Instead of actively trading this market, you could buy long-term options, or LEAPS. Or you could do something really quaint -- buy and hold a stock, selling calls along the way to generate cash.
2. Day or swing trade.
If you have a great PDA, a liberal boss or no day job whatsoever, you can day or swing trade. Otherwise, find a good trading desk or RIA.
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