Wednesday 5 October 2011

Balls of steel

DJI 5 October 2011
I have had a bleak couple of days. Victim of wishful thinking again I suppose. Looking for a rise in precious metals that has not come to pass. And a belief that the downward break of the Dow was the start of a large fall which also failed to materialise. So we're still stuck in the old channel where its hard to make money and easy to lose it. I'm not clear in my mind what to do next. To pull out and lick my wounds or carry on trying.

The viciousness of the moves is illustrated by yesterday's candle for the Dow. A candle in the wind if ever there was one. A 244 point move down to 10405 was transformed into a 157 rise in the last couple of hours of trading. It's impossible to know where we go next. A friend asked me whether I thought the problems of the Dexia Bank would hit the market. He thought that the end of the world was nigh. He was shocked when I said I doubted that it would make any difference. Wasn't the fall in the stock market, that we were seeing, the beginning of a new collapse? I said I was convinced that yesterday's fall was entirely due to European markets following the American ones. And so it turned out. Yesterday's recovery in the Dow has led to a 158 point rise in the FTSE and a 256 point rise in the DAX. I notice a that there is no more talk about the Dexia effect by commentators today, even though we now also have a downgrade of Italian debt. The market has lost touch with reality and we can only see what is happening by watching the charts.

In order to get through a time such as this you need balls of steel and a belief that you will win through in the end. I'd feel that much stronger if I felt better able to calculate the odds. At present I would advise no one to follow me because I am gritting my teeth and treading a precarious path. My life-line is the knowledge that when conditions return to normal I will know exactly what to do.

In the mean time the weather has broken. No more sunny days. Falling temperature and drizzle turning to rain. My spider friend has taken to nocturnal habits. I don't know if the wind has cut food supplies during the day or if it is the harsher conditions. But she spends most of the day curled up on the window frame with two legs holding threads of her web, presumably to alert her if a fly were to stray into her trap. My photo is again rather fuzzy but you can clearly see one of those legs out there feeling for the twitch of the arrival of a meal. My feelers are out there too. But the wind is whistling round them and they are mighty uncomfortable right now.

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