Focus on What You See

Happiness is not a brilliant climax to years of grim struggle and anxiety. It is a long succession of little decisions simply to be happy in the moment.
-- J. Donald Walters

Even the ugliest bear market will offer some good trading opportunities. The important thing is to not buy into the argument that the worst is over and the bottom is in. That will turn out to be the case at some point, but the danger of believing so prematurely far outweighs the benefit of calling bottoms over and over again.

When the major trend is down, like it has been for a while, the media is full of folks making dramatic calls about market turning points. The vast majority will be woefully off with their timing, but they will keep repeating it and hope that we forget that they were actually saying the same thing a thousand points ago.

I complain about these serial bottom calls quite often because their message encourages people to believe in some easy and simple turning point to the bear market. There will come a day that is the ultimate low, but trying to be fully invested at that exact point is a foolish quest, as any recovery will be long and hard and provide plenty of opportunities to build good positions with significant upside.

Our quest in a bear market isn't to seek that day when it finally ends but to try to extract a succession of some success along the way that preserve our capital and take advantage of the inevitable bounces that will occur. Looking for that grand day when the bear is finally history is not going to suddenly turn despair into joy. We won't even know until well after the fact when that day occurred.

We need to forget the predictions and deal with what is in front of us. The great thing about the market is that there are always some opportunities along the way, and you don't need predictions of the ultimate bottom to enjoy them.

After a big day on Tuesday, the market pulled back and consolidated on Wednesday. That leaves the bulls in pretty good shape for an end-of-the-year rally that many have been looking for. The technical condition is promising, and if we can get a little upside going, it should suck in some folks looking for end-of-the-year gains to take the sting out of the lousy year.

I'm still cautiously optimistic here because of the technical patterns, but the news flow is terrible and analysts are still finding things to downgrade, like Friedman Billings' (FBR - commentary - Cramer's Take) estimate and the target cut of Intel (INTC - commentary - Cramer's Take) today. The mood is still extremely cautious and the trading very choppy even though there does appear to be a fairly persistent bid under the market. Traders are finding some pockets of momentum and that improves the speculative mood, but it won't take much to trigger yet another rush for the exits.

So enjoy some happiness on a day-to-day basis and don't worry about whether this bear is ending or not. That really isn't going to make much of difference to our ultimate success.

We have a slightly positive open shaping up, but things are quiet and the news flow not very positive. With this technical setup, we have to give the dip-buyers the benefit of the doubt and see if they have the resolve to get things moving.

No positions.

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James "Rev Shark" DePorre is the author of Invest Like a Shark: How a Deaf Guy with No Job and Limited Capital made a Fortune Investing in the Stock Market. He is founder and CEO of Shark Asset Management, an investment management firm, and he also operates sharkinvesting.com, an interactive online community that serves and educates active investors. DePorre holds business and law degrees from the University of Michigan, is a member of the Michigan Bar Association and a former tax attorney and CPA. He lives in Anna Maria Island, Fla., with his wife and two children. Under no circumstances does the information in this column represent a recommendation to buy or sell stocks. Rev Shark appreciates your feedback; click here.