On the back of two ugly down days, the S&P 500 is up a few points headed into the afternoon. The Nasdaq is lagging, and is actually down 0.80% at the time of this writing. Days like today illicit a very dangerous emotion from traders—HOPE. Hope may work very well on the political campaign trail, but in the stock market, trading based on hope is one of the oldest sucker moves around. It is often said that bull markets climb a wall of worry, while bear markets slide down a slope of hope.
We could easily rally a few days from here, as we are short term oversold. So, adding short positions at this point is probably not correct. However, the very nature of a countertrend rally is that it is short lived, regardless of how exuberant it may seem. The great thing about the stock market is that, unlike in baseball, there are no called strikes, to quote Warren Buffett. If you believe, as I do right now, that the risk/reward profile of putting cash to work is unfavorable, then your best move is to patiently wait for a better pitch.
As you know, I have been watching $FCX as my tell for the broad market. It is up nicely today, over 4%. However, if you look at the daily chart, you will see that it is way too early to declare any kind of inflection point. What you want to see is a few more days of price stabilization combined with heavy buying volume.
I know that this kind of market, as well the cautious nature of my posts, can be frustrating for many of you who are growing impatient. All I can tell you is that as soon as we find ourselves in a healthier market, I will be eager to post as many favorable setups as I can. Conversely, should we get a multi-day low volume bounce from here, I will look at the short side should we break down again.
[youtube:http://www.youtube.com/watch?v=eKsXQq02dsw&feature=related 450 300]
chess, I know you have an obligation to your readers not to lose them money and I understand that
by you not throwing reckless trades out there (unlike RC who has abandoned his readers on the ETFC trade because he wanted to get out break even before them) it shows you are a good bro
however, yesterday we closed below the feb lows and broken out of a bear flag under the 200day MA
do you need someone to bonk you on the head or something?
I shorted MWW on the break down and there is lost of money to be made .
TZA is trying to break out
hit em and get out my boy
WTF, I am still long ETFC.
It’s pretty interesting how the Qs and RUT are now the laggards.
True–not good imo
Hi Chess, as always good writing. I respect your mind game. You’re a “Samurai”. My brother said,’ EU opened the pandora’s box” and the story to be continued. No need to hurry.
Thanks Tom. I strive to be a Samurai lol!