I'll deal with the goodies first. Elan took off over the past week, blasting to a new 52-week high of $22. I sold half of my position at $20.20.

That turned out to be much too early, but I'm not psychic. The stock dropped back to $21 on Wednesday but I won't lose any sleep over that . . . the worst that can happen me now is that I will lose a portion of my profits. My stop loss order is currently sitting just below $20 (I bought at $19). I'll keep raising it to lock in profits if the position continues to go in my favour.

My long bet on the S&P500 also went in my favour for most of the past week. I took some profits when it challenged its alltime high near 1540. The sellers came out of the woodwork on Wednesday (a drop of 1.4%). My remaining position is a very small one. If it dips below 1500, I'll close it completely.

My only new trade this week was a losing one. I'd been looking to short SanDisk for a while and got my chance when the stock made it up to its 200-day moving average at $46. The stock's 2007 high was also nearby, making this a great set-up.

Unfortunately, the filthy beast blew right past me and I was stopped out within a day of entry for a quick loss of a grand.

Several things irritated me about this loss. Firstly, it's always irritating to lose money on a good set-up. Secondly, the stock reversed downwards on Wednesday, meaning that I would still be in the trade if I'd elected to use a wider stop loss order. I'm not doubting my judgment on the placement of the stop order (it made sense), but it's still irritating to see this happen. Thirdly, I'm irritated that I don't feel more irritated.

Let me clarify. I hate losses.

As a trader, I accept that they are inevitable and part and parcel of the game. Still, every trader hates a loss and I'm no exception. With SanDisk, however, I shrugged off the loss with a nonchalance I'm unfamiliar with. Why?

Because I've made a packet over the last few months and was able to comfort myself with the thought that I was only playing with the market's money. I'll quote futures trader William Eckhardt on this notion of the 'market's money'.

"It's a comforting thought.

It certainly can't be as bad to lose 'their money' as 'yours'.

Right? Wrong. Why should it matter whom the money used to belong to? What matters is who it belongs to now and what to do about it. And in this case it all belongs to you."

He's completely right. If you view things differently, if you think it's acceptable to 'give it a lash' after a few winning trades (most newbie traders do), then you're headed for the market poorhouse.

As for me, I'm not beating myself up for shorting SanDisk. It was a good trade that made sense at the time. I am, however, a bit spooked by my reaction. Paradoxical, I know, but it's a slippery slope that one has to be aware of.

Anyway, enough of all that soul-searching. Looking at the markets, I continue to believe that new highs are more likely than not. There are a few warning signs, however. Since March, every sell-off in the indices has been followed by a quick bounce to new highs.

The market sell-off in early June was followed by a swift rebound, but this time both the Dow and the S&P stopped short of their old highs before selling off on Wednesday. The bulls' inability to push to new highs reflects a petering out of the momentum that has carried the markets over the last few months.

Secondly, sentiment surveys show that the number of bulls is increasing. For months, the surveys of the dumb money have shown that the average Joe has been bearish. Markets don't top when everyone is bearish.

They top when everyone is bullish. That's far from the case at the moment . . . there is still a lot of scepticism out there . . . but the diminution in bearishness suggests that at least some of the money that had been on the sidelines has been put to work recently.

Still, there are some positives too. The number of Nasdaq and small-cap stocks hitting new highs recently reached its highest in months.

Tops are generally seen when a decreasing number of stocks are doing all the legwork. It's hard to imagine a big downturn when market breadth is broadening rather than narrowing.

All in all, my outlook hasn't changed over the past few weeks. Keep a mixture of longs and shorts but favour the long side on dips to support points. In particular, I'd like to buy the Dow on weakness. The June lows are at 13,250. Considering that the 50-day average is nearby (13,285), that should be a lowrisk place to take a decent position.

I would look to buy on a dip to the 13,300 level, with a stop just under 13,200. The Dow hasn't tested its 50-day average in months and I'd be very surprised if it failed to hold it at the first attempt. Of course, it might not go that low. I might not make a single trade all week. I don't know. All I can do is watch and wait.

Weekly gain/loss: + 450
Overall balance: 48,900