Elan continues to do just fine, edging above $22. I've raised my stop loss order to just under $20.50 to protect my existing profits. There's no obvious price resistance nearby so I don't have any price target in mind. Instead, I plan on letting my profits run, all the time continuing to raise my stop order.

I was stopped out of my remaining long position in the S&P500 once the index dipped below 1500. It would have been nice if it had gone a little higher but I'm not complaining. This was one of those stress-free trades where I was in profit from the beginning.

I took a long bet on the Dow Jones on Monday that was shaping up to be equally stress-free. In fact, blissful might be a more appropriate word . . . I was up a grand within an hour or so of opening the position. Ordinarily, I'd have taken some profits at that juncture but I was hopeful of further upside. Instead, I raised my stop loss order to the breakeven point and decided to let my profits run. Unfortunately for Monkey, the market reversed and the Dow gave up all its gains late in the trading session, stopping me out in the process.

I outlined my reasoning for this trade last week. The Dow has been in a strong uptrend for some months now and hadn't come close to its 50-day average during that time. My experience is that strong stocks or indices almost invariably bounce on their first dip to this level. That's exactly what happened this time but the bounce was much more shortlived than I expected.

If I had not raised my original stop order, I'd be looking at a healthy profit now. (Wednesday saw the Dow bounce off its June lows and enjoy some decent upside. ) Still, I'm not second-guessing myself on that one. No trader should ever allow a decent profit to turn into a loss. I used to be a bit more cavalier on this point but I'm pretty rigid these days.

Capital preservation comes before capital accumulation, as the cliche goes. No, my mistake was in not taking a few quid off the table when I had the opportunity.

An identical set-up presented itself on Wednesday, when the Nasdaq 100 dipped to its 50-day average for the first time since early April.

This coincided with a nice round number (1900), making a long entry a no-brainer.

Just like with my Dow entry, a bounce was immediate and I was up a grand within hours.

This time, I took some profits.

This has been my third such trade in as many weeks. The S&P500 was the first of the major indices to dip to its 50day average. It bounced and I made some decent profits.

This week saw the turn of the Dow and the Nasdaq, both of which reacted similarly. I'm not saying the 50-day average is some kind of magic profit wand. It's not. Most of the time, indices whipsaw above and below such levels. The trick is to buy a strongly trending issue on the first dip. That's when shorts will look to take profits and longs will seek to get on board.

Return visits are not nearly as predictable. That's why, in last week's column, I recommended buying the Dow rather than the S&P. The S&P had bounced weeks previously. This week, the technical traders were more uncertain and the S&P has whipped around its 50-day average in a less predictable fashion. Similarly, this was the time to bet on the Dow and the Nasdaq.

Will they bounce on a return visit to the 50-day average in coming days or weeks? Maybe, but the outcome will not be as predictable as it was this time.

Technicals aside, what's been happening in the markets? There have been some jitters regarding the financial fall-out from the crisis in the subprime mortgage market, with the near collapse of two hedge funds owned by Bear Sterns spooking a few people.

Thing is, knowing the intricacies of such matters isn't going to make you a cent. That's why I'm not going to pretend such stuff interests me or that I can fathom the likelihood or significance of any hedge fund fall-out. The chattering classes and the pin-striped stockbrokers will waffle on about such matters but really, most of them haven't a clue.

Aspiring traders would be much better off perusing decent trading blogs like www. tradermike. net rather than burying themselves in useless economic data that gives them the illusion of knowledge. Trader Mike's summary of the market jump on Wednesday is very much how Monkey sees such matters: "There are theories for why the market rallied today (rates dropping; Bear Stearns' comments; bears taking cover ahead of the Fed) but I'd like to think it was just an oversold, technical bounce. The S&P bounced off of its June low, which we've been watching for a few days now, and the Nasdaq rebounded from its 50-day moving average".

Next week? I'm still seeing more potential longs than shorts. I'd love to get Intel near $22.50. Ebay looks like a good short if it can hit $32.75. It will also be interesting to see market reaction to Apple's iPhone launch. I'm guessing a 'sell the news' reaction although I haven't taken a position in advance. Whatever happens, I'll be gunning for a breach of that 50,000. To quote a recent political slogan, it's time.

Weekly gain/loss: + 900
Overall balance: 49,800