I mentioned on December 12th that I expected a range bound market in 2010. I mentioned 2004 as an analog. We’re now a month into the new year and my big picture view remains in tact. On 12/31, SPY closed at $111.34. At 3:52 ET, SPY is trading at $110.47. So with all the market talk, the major indexes haven’t moved yet in 2010.
I’m much more of a trend/swing trader than a scalp/day trader. It is not surprising that my gains have been modest in 2010. Only the short term traders have really had the opportunity to do well (emphasis on opportunity). There might be a few others that were able to ride it up in mid January and short the market at the opportune time but I’m willing to bet that is a small group.
So what is the plan? I continue to be patient. I’m don’t like missing opportunities but I also don’t like losing money. My “pyramid plan” has arguably been a good one in 2010. It got me a piece of the move up in early January and got me out during the drop.
I’m hoping that the primary trend remains up. If the market goes higher, I’ll be able to start adding positions again very soon. I’ll recommence the pyramid plan. There won’t be as much sitting on the sidelines. If the market goes down, I believe I’m likely months away from changing from a long disposition to a short disposition.
I’ll conclude by saying that I’m keenly aware that writing a blog post about sitting on the sidelines has no sizzle in it. I’m bored as well. But I believe this boredom is also the best recipe for success in this market.
I’m fortunate that I don’t have anything pressuring me to come up with ideas (even if crappy) everyday. That’s the benefit of not being on TV (e.g, Cramer), not running a fund with rules requiring me to be invested, not running a subscription service for readers, etc. You get the point.