The way the Dow Jones & The S&P 500 are consolidating under the 200 day moving average should worry you. We are setting up for a huge wash out in my opinion, and you want to be careful if you are long. Up 100 points is normal in a bear market and should be embraced with more selling.
My trading activity will remain light, as over-trading this kind of market is a good way to bring your account to zero. My short exposure at the moment includes puts in SHLD and a position in TZA- I will add to both on a further market breakdown. I still own a few longs, but my short term bias is short.
The waters are unsafe, just like the Gulf of Mexico, so you might as well wait for the cleanup/washout, before jumping back in.
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I was early with my add to TZA this morning. Volume looks not so good. Looks like the market wants to take a few more hostages.
I agree to remail cautious, but I am not as bearish as you; two very key indices have good looking consolidations ABOVE the 200 day MA – the DJ Transports and the Russell 2000; Nasdaq is also above. The tape the last few sessions has been very dull and you know what they say – never short a dull market. Obviously best to stay small going in to Fridays jobs report. – no doubt there is 2 sided risk to this market.
I agree. The $RUT is keeping from leaning all the way bearish.
I think RUT is just late to the party. This is classic bear market rally stuff. Like you said, consolidate under 200DMA and then the trap door opens up.
You’re right though, this action reminds me of 08 when nobody knew what was going on and two down days can be followed by a massive 300 point rally…… only to see the market tank further.
Exactly, as bad as i want to go long on a day like today, I won’t. THE BEAR IS COMING
It’s a giant conspiracy to suck everyone dry. I want to short more, but feel like I have enough already.
Looking back at the action of 08, it looks like the easiest short ever, but as it was happening the sharp bump ups like today’s action kept me from staying short and I was constantly covering. Not this time. Shorter than midget toe cheese ovah hea. I’m going to let it play out and add to short positions on days like today.
The leaders are holding breakouts well especially AAPL
Since they tell us where the market is going I’m not giving up hope quite yet
In fact there are many decent long setups starting to appear
I’ll have to agree, tonight’s scans are producing some good bullish setups.
Top pick: Cash
Good post.
Beware the bull trap set up.
It’s alway amusing how the pikers are attracted to a bad trade, like a moth to a flame-thrower.
Glad you are thinking sanely here.