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…but then again, to borrow the expression from the guys over at ESPN, aren’t we all?
The recurring pattern of sharp sell-offs from negative news flow out of Europe, followed by a snapback rally based on rumors of positive, accommodative policies is taking shape again this morning. Headed into the weekend, perhaps the only certainty is that more uncertainty will emanate out of the European politicians’ and central bankers’ meetings. Clearly, the market is concerned about the long-term viability of the European Union, or else I suspect we would not be seeing such sensitivity to price action from the headlines. Shorter-term, though, the various rumors alternate between a quick demise of the EU, versus the can being kicked down the road, which helps to perpetuate the day-to-day swings in stocks we are seeing.
From a swing trader’s perspective, the technicals are still attempting to consolidate, at best, which makes having conviction in either direction a difficult proposition. I have been keeping a very tight leash on any positions inside 12631, still sitting in heavy cash. While the temptation may be to shut off the computer and walk away from this market, I usually find in situations like these that it is better to keep an active watchlist for potential longs and shorts. By closely monitoring the watchlist, I will see if long setups like PIR come to fruition. If they fail, then that is usually a sign that the market will continue to punish bulls, even if it does not completely break down, and vice versa for short setups and bears.
