R.C. Market Report 10.09

• Market Trend: Downtrend

• My call for the bottom was premature. Having said that, based the rate of this decline, you need to ask yourself this one question. Is the stock market coming to an end? Fundamentals have been thrown out a long time ago. Technicals have indicated oversold signals for days now, yet we continue to sell off. Possibly the best way to trade this market is via human psychology. After taking a hit after hit after hit, there comes a point where you fight back and say "come on, hit me harder!" The market took a pounding in the final hour for the 7th straight declining day but I found myself smiling . I smiled because 1) I know the market and the world won't come to an end 2) I am going to survive through this and 3) the reward/risk ratio has become more favorable. The market may drop again tomorrow and possibly again on Monday. However, as a trader, I believe it'd be MORE PAINFUL to miss out on a possible 20, 30, 50% rally (that's going to happen unless you believe the world will end) than the pain of withstanding another 10% decline (which you've become accustomed to). Therefore, I was wrong to enter yesterday, but I am not exiting my long position. I firmly believe that it has a very good chance of bearing fruit in the near future.