Finding Weaknesses in Your Trading Style

We have just four days of trading before this interesting year is on the books, and it is shaping up to be a snooze fest with the S&P 500 just right about in the middle of a fairly narrow range of 2,250 to 2,278. The Dow Jones Industrial Average is just 65 points below the high-profile magnet of 20,000. We may see that level breached this week, though it would only occur on the typical low volume that characterizes the last two weeks of each year. If we do hit that level, be on the lookout for profit-taking and a decline in buying interest.

We are at that time when anyone who is making adjustments in their asset allocations has likely already done so. When institutional traders shift money around, it's not an event; it's a process. It takes a lot of time and volume to lighten up in a stock position, or accumulate a new position. At this time of the year, you'll often see the big losers start to find support as they are recognized as having the potential to reverse their drift toward a more attractive valuation and become profitable investments in 2017. You'll also tend to see the winners of 2016 trade near their highs on low volume. This is due to a diminished supply of stock as current holders wait for the next year before taking profits. This lack of supply makes the stock harder to buy. Because there is always demand for a stock during market hours, only the price and share size are negotiable. And the buyer doesn't have much negotiating power. He wants to buy stock, and there's not much of it available. So he pays the offered price, and that drives the stock higher, albeit on light volume....585 more words left in this article. To read them, just click below and try Real Money FREE for 14 days.

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