In last week's edition of the Sterling Weekly I said that I was expecting a Fall Rally into the Holiday season. Based upon Tuesday's trading activity it appears that we may actually get the expected rally. This week I have raised my target levels on the major market indices that I track on a regular basis with the biggest news being my new intermediate target on the NASDAQ 100 (NDX) of 1,846.96

As part of an ongoing series of articles I have been writing about 11 "Rules for Trading" that I have developed. I recently covered the Third Rule for Trading in the August 12th edition of the Sterling Weekly, and this week I would like to discuss my Fourth Rule for Trading, "Do not be afraid to sell at an early profit and have the opportunity to buy back at a lower price."

The logic and thinking behind the Fourth Rule for Trading is very simple and builds upon on the 1st Three Rules for Trading which focus upon protecting your profits, but also starts to deal with the psychological mind set of trading. Many investors and traders will have an initial price target when they enter a position, and let's be honest even for the best of us not all of our stocks will reach those price levels. When a stock starts to back off or move against us, many investors/traders will become fixated on their initial price target and violate the 1st Three Rules for Trading resulting in their holding a position at a loss. Meanwhile if they had been willing to take their profits or let their stops trigger a sale, then they would at least have the opportunity to re-enter the position the position and possibly participate in another profit generating move. It does not always work out that way, but at least they are not letting profitable positions turn into loosing positions. This is key to being a profitable investor/trader, because unfortunately over the years I have seen many people with unprofitable accounts simply because they would not sell profitable stocks when they had the chance.

Sterling Investment Services is an investment research and money management firm publishing the Prime Stock Newsletter. The Prime Stock Newsletter is a daily comprehensive newsletter that is useful for investors and traders alike. Whether you are looking for short term trading opportunities ranging from day trading to a couple of weeks or if you looking to acquire a long term portfolio at smart entry points. Subscriptions a $30/month. a 3 DAY TRAIL SUBSCRIPTION IS ONLY $4.95 (more).

Last week was a more active week from a trading standpoint. It was definitely one that saw the market treat our recommendations favorably.

Today's Opinion: Closed @ 1,026.27 While the S&P 500 did not move lower as I expected it would when I published last week's Sterling Weekly as the Dow Jones at least reached our initial target level, the S&P 500 actually demonstrated greater strength than the Dow Jones Industrial Average. After giving it a day or two to move as expected, I reversed my opinion and returned to the short term bullish expectations on the S&P 500, for the record I am bullish over the intermediate and long term on the S&P 500. Current Expections: Called higher with the close of 996.73 on August 26th. The S&P 500 should move higher and test 1.057.86