Ups & Downs

February is off to a disappointing start. For the trading week that just concluded, the Dow lost -1%, the Nasdaq retreated -1.8%, the S&P 500 fell -1.3%, and the Russell 2000 dropped -1.1%.

Like usual, you could probably guess why without having paid any attention to the market over the last five days. Concerns over inflation, higher interest rates, energy prices, disappointing earnings reports, and geopolitical concerns kept investors in a defensive mood. Even though everyone is pleased that January closed with nice gains (i.e. the famous January Barometer), the market is trying to look ahead and it is simply finding little to get overly excited about in the near-term. This is especially true when overbought conditions dominate and the sectors and stocks that have been performing well are long overdue for some intense corrective action.

For me, it was a frustrating week. It happens to everyone, and so far seems to be the dominant theme for me in 2006. Trading for a living, like any career, has its ups and downs and lots of in-between times. The best we can do is to stay focused, keep working hard, and stay patient until things get easier. They always do sooner or later.

See you next week!