The Butterfly Flight of 2009

Since we have got to 4300 (my original target for the stimulus/budget rally), I have been struggling with trading on the short side. Somehow, I have set in mind that no buying over 4300, which has been costing me dearly last week.

I have had a good look at the weekly price chart and have decided to change my strategy to one of buying on dips and dives in this what I now call the Butterfly Flight of 2009, till August 2009, Week 34 to be more precise. I think the next bear leg will come around that time, or at least around that time, the market and the economy will be at a turning point,either big up or big down.

So if you are a permabear, you might as well go hybernating now till August, when it is time for you to come out in the autumn sunshine and festivity.

If you are a permabull, this is as good a time as it gets. While you might kick yourself for missing the early part of the rally, but you have only missed half of the rally, there is still another 500 points or so to come yet.

Trading will not be easy, as it will be an antigravity ride all the way up into 5000's. You will be fighting your fear all the way up.

Obviously, this is just one scenario that might pan out into the future and there will be other possibilities.

Here is my trading plan till August 2009:

1. Be stubborn and buy on dips and dives until the butterfly has been broken;

2. Once the butterfly is broken, reassess and formulate a new trading plan.

I have made up my mind based on drawing a butterfly on the weekly chart, which could easily be a flight of fantasy, but I am sticking to it for now.

PS I will be updating the moo river watch as usual over this weekend.