Did I do the right thing ? pls help

[Jane]

Hi everyone,
I am an anxious newbie here. I panicked last Friday when the TSX went way down and I sold all my equities. Now, I feel foolish that I pulled out far too soon, seeing how the market is going way up this week and continuing upwards today.

Thing is, I got spooked reading all the articles out there, that the market is overbought, the fundamentals are not there to support these prices, that there will be a correction, possibly 20% or as
bad as the March lows etc.  So first 2 days of October, I panicked
and sold at a loss, thinking I should just salvage what I've got.
I've been just a buy and hold type, lost 40% of my life savings since the crash and am only trying to read and learn in the past few weeks.

I have a lot to learn yet. In the meantime, would anyone please tell
me if I have made a mega mistake here pulling out last week - I feel
stupid missing out on all the gains I could have made this week, and may be more to come in the next months or so.

What is your sense of things to come ? Do you think there will be a large correction still ? should I get back in at the next dip or just stay on the sidelines until next year when the market direction might be more clear then ?

Please help.  I feel quite bad this whole week and very lost.

Anxious newbie,
Jane

[bryanmcn]

Hi Jane

If your a buy and hold type then your on the wrong site. I suspect that your changing your style after last years crash.

To answer your question, traders and the market fundamentalists are filled with fear and worry. That makes the likelyhood of further upside very possible. Read a little about contrarion trading and your understand why but in summary ...

When there is fear, there are a lot of people (like yourself) who have sold and are waiting in cash. THat leaves only the the buyers. As the fear dissipates, more and more buyers move into the market pushing stocks up and up until the last buyers get in full of optimism and hope. Thats when things go bad. With no more buyers, the sellers take over and start a downward spiral.

The good news is by watching the market trends, setting a trading plan with solid stop losses you will do well. Stick to your plan. Emotion and psychology drive the market (Read "Reminescences of a Stock Operator") so if you keep your cool, trade your plan without emotion you will win. In other words; When Newsweek calls out that we are in a bull market GET OUT!

Do some reading and start slow. The SSP portfolios are notoriously volitile (I don't have the guts to trade the way they do) so be carefull.

Good luck.
Bryan
PS: If you didn't guess it, I'm bullish right now (could change tomorrow though). 

[Jane]

Hi Bryan

Thanks so much for your response. 

I never knew what I was doing, just handing my money to my financial "advisor" (aka. mutual funds salesman). He never called
when the market crashed.  I called him and he said not to sell etc
etc.  Its was all just to protect his own fees.  So yeah, its time
to change, take control and learn to do this myself. 

Its just hard to see all this upward trend this week, after I have sold last week at a loss.  I guess I pulled out too soon. Do you think there will be a large correction this year ?

Jane

[bryanmcn]

Jane

My trading time frame is short term (1 to 2 weeks) so I don't think much further out than that. The trend looks good for now. If there's a  correction, I would buy just after the dip when it turns up again.

I posted earlier today about www.stockcharts.com They have lots of valueable (and free) information. Why don't you check out the site and do some reading?

Bryan

[Jane]

Hi Bryan. I'm reading and reading... lots to learn 
Thanks !