I am still not going all-in long or anything close to it, just yet. However, as the market shows signs of improvement I am resisting the urge to fight the tape. Perhaps this is another trap before we roll over. After all, the 50 day moving average is still declining on the indices. With that in mind, I have a close eye on all positions and are merely legging in to see how they fare. This methodically legging back in strategy has worked exceptionally well for me over the years, particularly when I have kept my powder dry and completely missed out on the carnage many portfolios took in the 11% broad market correction. If we are just bottoming now, then the time to increase your aggression will be there, and then some. If we are not yet done with this correction, you are still keeping capital safe, by and large.

I am looking to see whether the market continues to let breakouts stick. To me, in addition to broader participation from stocks, that is one of the hallmarks of a healthier market. The biotechs are strong, as well as select techs, but we likely need better charts, healing through time, across the board before we are off to the races.

Back with more later. You can find me in the 12631 chat room for now.

http://www.youtube.com/watch?v=7Q3SFsr42VQ&feature=player_embedded

Direct Vimeo Link Click Here

While many traders are just now catching  on to the notion that the market has no clue where it wants to go next, we have been looking for this type of action for over a month now inside 12631. When you see this type of “one day up, one day down, two days up three days down, three days up…” type of movement, your best bet is usually to avoid the mess by moving to a heavy portfolio cash position. Sure, if you are craving action then you can try to time each precise short-term inflection point. At first, that might even seem like a mere innocent cheap thrill to bide your time. Ultimately, though, most will fail miserably at day trading in real-time, despite hindsight proclamations, as day trading is anything but  a cheap thrill and is usually quite expensive.

My current take on the market is this: Due to my heavy cash position since the April top, I do not care in which direction the market breaks from here. If it breaks higher, then great, I will leg in if participation is broad and improving. If we break lower, I expect plenty of trapped longs to capitulate. I still believe we have some kinks to work out before we are off to the races for another sustained uptrend, while of course we will see bounces along the way.  All in all, I am pleased with how our members are playing 2012. It is very easy to wake up to the temptations of emotional trading in this type of a market, which is why approaching the market without ego enables us to not have to chase back losses at this point.

Oh, and for all of you Twitter folk who are hell-bent on “keeping the premium services honest,” here is my #Timestamped Weekly Strategy Session post inside the 12631 Trading Service from May 28th of this year, when bears were all-in short, and bulls were all-in long for the big bottom:

Three steps forward, two steps back; Three steps back, two steps forward…

I expect the price action over the next month or so to resemble the above pattern. Tempering your emotions in either direction continues to be critical, given the corrective nature of the broad market since April. Until we see at least a few explosive days higher with broad participation, I suggest not embracing the exuberance associated with oversold rallies.

Inside the 12631 Trading Service, we have been expecting this type of price action based upon our interpretation of this market continuing to be in correction. Each weekend we discuss strategy at length for the coming trading week, considering all the angles and assessing the highest probability scenarios. After the initial leg down in a correction, there is a tendency to see a snapback rally followed by extremely grueling price action. One day the bears lose their shirts, the next day the bulls, which is exactly what we have seen. Ultimately, protecting your capital is the best strategy as technical bases are presumably being built.

In addition to having a talented and eclectic group of traders in our state of the art chat room, 12631 the best place on the internet to block out the damaging noise and focus on winning strategies and decision-making. Instead of trying to always find the next hot tip, our members are refining their discipline and are not only surviving in this business, as many traders are merely trying to do, but they are thriving in 2012.

Come see us for yourself, by clicking on the 12631 hyperlink for more details about joining.

Back with the video market recap after the bell.

The 12631 Trading Service inside The PPT has been on point with this market all year. After riding the uptrend aggressively long to start the year, our members have been largely in cash since April, avoiding the choppy mess of a market, with some huge winning trades here and there on both the long and short side. Presently, heavy cash and an open mind are the themes in our state of the art chat room. Our current roster of members is far and away the most dynamic group of talented traders (and great people!) that I have ever been apart of, including our mascot, R.W. Pelican (CEO of iBankCoin Security Apparatus). @RaginCajun and I are constantly blown away at how powerful, positive, and conducive to traders’ growth our chat room atmosphere has become.

Don’t delay the inevitable. Please click on the 12631 hyperlink to learn more about joining our service tonight, to be part of a great group that will help you avoid the turmoil!

Our final zoomed-out 30-minute SPY look for the month of May leaves us with many questions. We have plenty more macro data coming out tomorrow, and the European banks and member nations are likely to dominate the news flow over the weekend. Technically, the market has been flopping around in a neutral manner over the past two weeks, after an initial steep downdraft. Sentiment seems to be tilted towards hope for a relief rally here, but there are too many moving parts with this market for me to have conviction either way, which is why I have moved to the sidelines and am staying objective.

May has been a sloppy month for stocks, and if you have protected your capital like we have inside the 12631 Trading Service you are in a good position to take advantage of the market’s next big move, whenever that happens. Alternatively, if we knock out a better-defined trading range, there will be some opportunities there as well.

If you have taken some hits to your account and want to improve inside the best trading atmosphere and community on the web, please click on the 12631 hyperlink for more details about joining our service.

Back after the bell with my video recap…

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