Technically, the market bulls pulled another rabbit out of their hat this morning, as things looked very bleak. The reversal was impressive, but as I said last night, until the market gets over its short-term moving averages, there is no reason to get bullish. Those levels I will watch are around 2265 on the Nasdaq, and around 1250 on the S&P 500. We are pretty close to those levels so tomorrow should be interesting.
I pointed our last night that the financials were sitting right at support, and a break here could be very important. They did gap down big this morning, but since I couldn't catch the gap down in financials, I waited for a bounce and did enter SKF at $121.59 and WB short at $13.88. Both of these were very close to resistance levels so I thought it was worth a shot. Well, of course, the financials continued to rally, and I got stopped out of both with small losses of 1.6% and 2.1% respectively. I went a whole day without trading SKF so I guess it was time to get back in.
I also was stopped out of my MON short as it rallied above its 9 day moving average for 7.4% gain. I was moving my stop down as I went but it is frustrating because I was up as much as 12% in this. It was also frustrating to watch the other ag stocks like CF and POT fall much farther and faster than this stock.
My stop was also hit with BIDU at $276.02, which gave me 5.3% gain. This was another one where I was up around 12% but thought it was worth holding for more gains. I have gotten away from taking profits quickly because this market showed all indications of making a major move lower and I want to catch that move, but right now, that patience is not working.
Right now this market is very frustrating, at least for me. After all of the trades I made the past week or so, many of which I thought were very good setups and I was excited about potential-wise, I am still at the same spot I was when this move lower started and I began making those trades. I don't know if I am just picking the wrong trades, not taking profits early enough, or just getting unlucky. For me, this market still kind of sucks, even though I thought last Thursday we were finally set for a tradeable trend lower.
Because of this, I want to ask traders that read this blog and are much more experienced than me (this is around my fourth year trading) and have been through market cycles before a question. Is this current environment just typical of a normal bear market, or is it less sensible, less smooth, and crazier than most? I can't remember a market that makes less sense than this one does. One of the biggest investment firms in the world appears to be going under, and what do financial stocks do? Nothing but rally completely off their lows for the day. Maybe I am showing my inexperience here. I wonder if the fact that this market has been interfered with so much by our government has something to do with it. I mean, we pretty much are a fascist/socialist state as of now - maybe the market is just responding to that fact.
I don't know - I continued to just be confused by the action of the last two months or so, and would love to get some thoughts from veteran traders if I am imagining this or are things really this messed up. I have read other bloggers call this the "Costanza Market" in honor of the character from Seinfeld that did everything that went against his good sense and judgement. This is not meant to be a rant, just a question. Maybe a better way to put it is "does anyone have a clue what is going on with this market?" I don't know how anyone can say Wall Street has not lost a ton of credibility this past year, and perhaps the crazy action is showing that.
Bottom line is that it continues to be very tough out there. The volatility and swings continue to be crazy and it seems like we are once again back to having only day trades work well. We may continue higher tomorrow, but if we do, the one bright spot is that there should be some very nice short setups that present themselves. I guess it is just a matter of if those setups actually work. I'll be back later with some charts.