February 2012 Review, March Preview

February for me was a rather uneventful month. Thank goodness it was a short month. On the 4th, we officially welcomed the Dragon Year and fortune for me, it seemed, changed. In the last couple of days of Chinese New Year, my luck at the tables turned around and I was winning everything. The week that followed was amazingly profitable in the market. The week after that was even better. My ship had arrived. This is my year as I had been fortunate enough to have been born 48 years ago in the year of the Wood Dragon under the Day Dragon. If you didn’t what all that meant, it is supposed to be good.

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Then I got cocky and complacent and the market, as expected, set me straight again and reminded me that in spite of being a Dragon in the Dragon year, I still am human and prone to losses. Humble pie sometimes has a bitter taste but then again, so does medicine and they are both good for you.

On 8th February, I honored the person who had been sharing my life, my pains, my joys, my sorrows, my debts, my wealth and everything else I could throw at her for the last 20 years. She made a vow on that day, 20 years earlier and never broke her promise since. And I love her dearly for that forever.

On Sunday 26 February 2012, Adam and I had a ball of a time with one of the most energetic WA batches that we’ve had in a long time. I am so looking forward to Monday’s Booster session with them. Thanks 32, for making it remarkable and memorable!

And that was my February.

MARKET MATTERS

Dow Jones - AMC 28 February 2012

February is traditionally a flattish month, famous for being stingy with handing out gain. But February of 2012 has been an exception with the DOW dishing out more than 2.5% by the close of 28 Feb with one session remaining.

February 2012 saw the market break multi year highs with the NASDAQ getting up to 11 year highs, DOW hitting 4 year highs and S&P500 breaking its 52 week high to get up to a three-and-a-half year highs by Friday 24 February with three session remaining. That left the market grossly overbought without a correction since December last year as we head into two traditionally bullish months, March and April.

Amazingly, against the grain, against the odds, against the possibilities and against all logic, the market grinds out new highs on Monday 27 and Tuesday 28 February. This has got to be one of the best Februaries in recent history. DOW now sits above 13,000 for the first time since 2008, S&P is having one of the best runs in the last decade and NASDAQ popped up to another 11 year high.

The last time the market made such an amazing run was between the start of September to the first week of November in 2010 and then again at the start of December 2010 to the middle of February 2011.

The market could either be making another similar run or running into serious overbought trouble. What makes all this all the more amazing is the run that oil has made from $96 to $109.95 in three weeks. This is a very rare occurrence when oil and equities move in the same direction with mind-boggling gains.

Important to note, though, is that volumes in the risk market have been woeful the higher it climbed. With this much divergence in the market, I cannot but be nervous and extremely cautious in spite of the promise of bullish months ahead.

My cries for a correction are slowly and surely turning into a prayer that we don’t crash from here. In my opinion, the time for a correction has come and gone and now the inevitable is past the point of no return. Any correction from this level is going to be very nasty.

Trivia For March

March is the last month of Quarter One and has 22 trading sessions without any holidays this year. March usually starts out well, stays bullish for most of the month but ends poorly in the last week.

March Trivia

Commodities

SUMMARY

March 2012 for me is slated to be the busiest month to date. It’s going to get seriously crazy from the middle of March onwards. It is a good problem but I am not looking forward to it.

Don’t forget to check out this month’s Pattern Trader Tools’ Monthly Sector Report on Agriculture. This is my favorite sector and there are many great gems in this report.

Agri-Business 2012 Sector Report

Check it out here.

Till next month, Safe Trading & Happy Hunting … as always.

*WOOF!*

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