A Z-Trader's Thoughts on Recent "Vol" 9/25/11

Excerpt from one of our contributor's articles at SeekingAlpha:

Here are a few quick thoughts for these volatile conditions, during these difficult economic times:

• Don’t try and catch a falling knife. Most good trading systems will minimize risk and “stop losses” from accumulating. You can never tell how far emotions will carry a large market move.
• When “contagion” spreads, it is sometimes best to step aside and reduce positions because psychology and emotions can also spread – causing markets to move past any "reasonable" level.
• Many portfolio managers are reducing positions, so markets become more "correlated" to one another.
• “Diversification helps until it no longer helps.”
• Trade down to the level that lets you "sleep at night."
• From a trader's perspective, once the markets find footing, these "dislocations" may offer opportunities.

Read more here:
http://seekingalpha.com/article/295688-a-trader-s-thoughts-on-recent-market-volatility

Market Update; Trader Thoughts (9/23 - 7am)

The stock market has dropped swiftly and viciously the past few days.  This has impacted most other markets -- including crude oil, precious metals, commodities, currencies and fixed income.  A few quick thoughts from the blog's contributors who are traders and investors:

• Don't try and catch a falling knife.  We had a blog post recently about this...
• Trade down to the level that lets you "sleep at night."
• Stick to your trading plan and/or system.  Systematic approaches maintain discipline and reduce the impact of emotion and psychology.

We are writing an article for Seeking Alpha on some of these topics.  And in case you were wondering:

• Our stock market indicators are currently "overall" bearish.
• Our short-term indicators have dictated our stock market positions because the other indicators (long-term and intermediate-term) were neutral.  
• As our readers know, our intermediate-term and long-term indicators went to neutral on our last post on stock market indicators -- when the S&P was at 1216.  
• Currently, however, our long-term model flipped to bearish (depending on market action, this may change; we will keep you posted).  In addition the intermediate-term indicators are moderately bearish (but a look-ahead shows that the oversold indicator may flip to bullish in the near-term). 
• The S&P closed Thursday at 1130. 

MLB Playoff Analysis for NY Times

In case you missed it, here's some analysis we did for the 2010 baseball playoffs based on quantitative analysis of concepts of sports psychology.

http://bats.blogs.nytimes.com/2010/10/06/which-teams-have-the-traits-of-a-champion/