The market has taken a turn from the heavy selling we saw earlier this week towards frustrating just about every type of trader imaginable. Thus far this morning, we are seeing another rally attempt get faded. The issue then becomes whether this frustrating grind is indeed part of a bottoming process.
I am keying off some levels in the Russell 2000 Index and the S&P 500, not to mention the semiconductors and financials. Overall, I would describe my market posture as standing pat here with more cash on hand than I would like to have in an intermediate-term uptrend. Nonetheless, out of respect for a declining 50-day moving average on the Nasdaq (still rising on the S&P and Russell, though) I am letting this correction play out without stepping in too aggressively to try to nail a bottom.
My working thesis continues to be that the market is on the cusp of a major move. With many indices and sectors at pivotal levels, such as the Dow Jones Transportation Average at the 5,000 level, I will let the market reveal whether this is the darkest part before dawn…or whether the night is young.
