Heading into the final hour of trading before a long holiday weekend, the market is behaving in a decidedly non festive manner. Concerns about Fitch’s downgrade on the creditworthiness of Spain, among other factors, have been pushing stocks lower all day. Trying to ascertain whether longs or shorts will be more apt to force the action before the three day weekend is a pure coin flip at this point. Beyond that, the rally we saw yesterday quickly worked off our oversold condition, and even put some indicators, such as The PPT broad market hybrid, into overbought territory.
Needless to say, we continue to be in a very tricky, news driven market. To argue with Mr. Market, via bottom calling, has been a money losing strategy thus far. However, as yesterday showed, even the bears can get slaughtered in a sharp downtrend when they press their bets too hard and do not take profits.
Thus, cash is where you want to be right now. I cannot overstate the power of holding high levels of cash when we see market conditions such as these. By no means do I prefer cash over equities over the long run. However, there are certain times when it is absolutely essential. Whether you realize it or not, many traders are being wiped out as we speak by this most recent correction.
Eventually, these unhealthy market conditions will change. When it does, I will be eager to get involved again. Until that time arrives, cash and patience are still where it’s at.
Who stole shatners pinky ring?
LoL you’re a funny guy Rand. Thanks for reading. Enjoy the weekend.
You and I have been on the exact same page for months. I’ve enjoyed your posts, glad you’re part of iBC.
95% of my trades all year were middle of feb – end of april, and there was money and splendor raining down all over my desk. I could end the year now with satisfying ytd gains.
It’s like, dont you want to roll over, and wake up next to a beautiful sexy market, not some beat ass one you decided to trade anyway when you were drunk off rumple minze ?
I think that’s a pretty apt comparison.
Anyway, yeah, cash –> Good.
Glad to be working with you. It is interesting that the confluence of factors we both look at have led us to the same conclusion. Breadth, combined with price and volume have all been pointing to this kind of market as early as the beginning of April.
You are right about the comparison. I mean, sometimes it really is as simple as that. If you walk into the only bar in town and see a bunch of butterfaces, with a 3:1 dude to chick ratio, then why not turn around and go home? The bar will still be there tomorrow, and the conditions may very well improve. Why force it tonight?
You guys should write a book together called Trading and Pickup Techniques
very happy with your work.
Great addition to the site.
Thanks Fly.
You are killing, Chess.
If you care to do some commentary on ATPG’s chart, other than o-shit that sux fer you, I would welcome a second/third/hundreth set of eyes.
80% cash ovah heah, and some ATPG in the “oh shit that sux fer you” account.
Thanks Moobs.
Well, the stock is obviously completely beholden to a constantly changing rare event right now, and the regulatory fallout from that. Even if this is an overreaction and an unjust punishment, the bears have a huge edge here with fear working in their favor, and they are pressing their bets every chance they get–just witness the huge put buying today.
Technically, the weekly chart shows the stock is sitting in the mid $10 range, which happened to be tough resistance for the first eight months of 2009. So, it will be interesting to see if prior resistance can turn into current support.
I would be looking for deep value guys to come in and try to support the stock next week. If that does not happen, then I would say some wealthy and connected people know something that we do not.
Chess,
You and Danny have been and are confirming everything I’m seeing. It’s nice to be seeing things the way two experts are. So maybe I’m starting to get it.
Thanks!
I saw some positive signs in the markets the last few days. We might see a turnaround next week.
Wish i could enjoy it. Working again in louisiana for RW Pelican. He has me beating every BP asshole he comes across. Boy, when you can fly, its hard to keep up with him!!