Bloodbath on the Stock Market

September was a rollercoaster month in the major stock markets. Blood was shed, giants got slaughtered, fortunes were lost, and governments were forced to take emergency measures. The largest one day increase in more than a decade occurred in September, ironically, the largest one fall in more than a decade occurred within the same month. While the bulls received a whipping, the bears were smiling all the way to the bank, that is the banks that are still standing.

Personally, even though I knew from the charts the the market was heading down (check my post on the 4th of September http://diligenttrader.blogspot.com/2008/09/why-market-might-be-heading-for-another.html), I stood aside most of the month. This was mainly because volatility was high and it was a day trader's market. Also, there was a lot of suspense with regards to what would happen next, for instance, will the house pass the $700b bail-out bill, will the treasury inject money into the system etc. Most openings were either a gap up or a gap down and the market was driven by sentiment and news.

What does October hold. The daily charts are showing signs of recovery even though the monthly charts are still in a downtrend. I'll be looking at individual shares rather than the indices and look for buying and shorting opportunities. However, it has to be said that this is a market that should be treaded with care and good risk management is essential.









All the best.