This blog post originally appeared on RealMoney Silver on May 17 at 7:37 a.m. EDT.
We must accept what the market gives us, and, from my perch, (in a market without memory from day to day), we have likely entered a non-trending, trading-range backdrop. Opportunistic trading differs dramatically from opportunistic investing (which Howard Marks so eloquently chronicled in his recent book, The Most Important Thing: Uncommon Sense for the Thoughtful Investor). Nevertheless, this could prove to be an excellent period for opportunistic traders and a lousy environment for the buy-and-hold crowd. In a non-trending market, opportunistic trading can be seen as a replacement to momentum trading and investing, but it requires skills that are different, harder to execute and even more difficult to explain. Compared to the classical lessons learned in defining value from Benjamin Graham's The Intelligent Investor: The Definitive Book on Value Investing and Graham and Dodd's Security Analysis, the playbook to opportunistic trading is oblique. Opportunistic trading is more intuitive and visceral. It is staccato, not fluid, and it is not wrapped neatly in a textbook (with a bow around it). There is no how-to book on opportunistic trading. Technicals take a more important role in opportunistic trading. Stochastics, support and resistance lines and overbought and oversold markets/stocks must be monitored more closely than in a trending market. In a non-trending market, selling rips and buying dips make more sense as momentum moves have a short shelf life. In a non-trending market, price swings (both up and down) are exaggerated, especially during earnings report periods. The wild swing in JCPenney's (JCP) shares yesterday was a good example of this. But out of those swings comes opportunity, however, they often require an instantaneous (or almost instantaneous) analysis of credit quality, as an example. Finally, in a non-trending market, erring on the side of conservatism and keeping your return expectations low makes sense. Keep investment and trading positions smaller than normal, as the uncertainty and market's lack of memory (from day to day) rises. In the days ahead, I will elaborate on some opportunistic trading strategies that I employ, as well as keeping you apprised, as always, of specific opportunistic trades. Doug Kass writes daily for RealMoney Silver, a premium bundle service from TheStreet.com. For a free trial to RealMoney Silver and exclusive access to Mr. Kass's daily trading diary, please click here. Now you can enjoy all the award-winning articles, expert commentary, and streaming HD video from TheStreet -- PLUS powerful technical analysis tools -- anytime, anywhere right on your iPad, free. Click here to download TheStreet iPad app now. Add Comment Tweet At the time of publication, Kass and/or his funds had no positions in the stocks mentioned. Doug Kass is the president of Seabreeze Partners Management Inc. Under no circumstances does this information represent a recommendation to buy, sell or hold any security. adsonar_placementId=1341527;adsonar_pid=879768;adsonar_ps=-1;adsonar_zw=600;adsonar_zh=280;adsonar_jv='ads.adsonar.com'; try { function DM_onSegsAvailable(segs, cust_id) { for (var i=0;i //* Global Functions *// function metadataRegisterNS(ns){ var nsParts = ns.split("."); var root = window; for(var i=0; i Dow Jones S&P 500 NASDAQ 10-Year Note 12,479.58 1,328.98 2,783.21 31.21 Oil * 110.51 DOWN 68.79 DOWN 0.49 UP 0.90 DOWN 0.28 10 Yr 3.12% SPDR Gold 144.74 -0.55% -0.04% +0.03% -0.89% Data delayed 20 minutes Most Popular Stories and Tools var randnum = Math.floor(Math.random() * 100) if (randnum < 45) { document.write("Ex-Dividend Date Calendar"); document.write("Cramer's Latest Picks from Mad Money"); document.write("Bank Safety Ratings and Screener"); document.write("Top-Rated Stocks"); document.write("Highest-Yielding Dividend Stocks"); document.write("Warren Buffett's Portfolio"); } else { document.write("10 Best Dow Dividend Stocks"); document.write("Top 10 'Buy'-Rated Stocks Under $5"); document.write("10 Cities Unaffected by a Bad Economy"); document.write("13 Ugliest Phones of the Mobile Era"); document.write("10 Celebrities Who Lost Big Financially"); document.write("Paulson's 10 Best New Investment Ideas"); } Twitter Facebook RSS Mobile App adsonar_placementId=1341369;adsonar_pid=879768;adsonar_ps=-1;adsonar_zw=320;adsonar_zh=280;adsonar_jv='ads.adsonar.com'; Brokerage Partners Free Newsletters from TheStreetAfter the Bell
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