Both the bears and bulls are out in full force today throwing around the usual cliches in their favor. Bears are claiming that this weak bounce is indicative of lower prices coming soon after a laughable attempt at a rally. Bulls are arguing that selling pressure and volume are drying up, setting the stage for a bonafide squeeze later in the week. Either way, we are faced with a doji as we work through the final hour of trading.
Dojis usually do not denote anything more than indecision on the part of market players, but they are also useful for avoiding overtrading. It is easy to get restless on a day like today and put on too many trades. However, when the market is undecided as to where to go next, you are bound to get chopped up with all of those positions. The better strategy is to watch which areas of the market are showing surprising resilience (financials), and monitor them for continued strength as the week progresses, in the event we see this indecision cleared up.
Chess: this market has been hard to predict (master of the obvious). Therefore, I have been using pair trades to limit risk. It has been working pretty well, but thought that since you have a knack for this, you might recommend some intellegent pair trades. Thanks a million.
Not so sure pare trade is the way to go here. I’ll have to see tomorrow’s action.
Somehow the shining light seems to be the financials. Possibly related to the Obama comments this morning.
Indeed
my lasting cliche seems to be buy high and sell low. not this time. i’m holding my short $xlf position for the week. i expect more weak economic numbers and a china unwind. disclosure long $faz.
yah, leave the fight to the heroes. muhahaha
hi there,
I´ve watched XLF recent price action and we might be near to the completion of a bottom. I bet next week will be much more fun for the bulls ; )
Stay cool and thanks for all your posts cheese