Monday, December 22, 2008

State of the Market - 12/22/08

Well, for most of the day, it looked like Wall Street was finally ready to give us some guidance in terms of where it wants to go, but of course that would be too easy. The market started lower at the open and fell pretty steadily throughout the session, not counting a few periods of consolidation during the 10:00 hour and lunchtime. The selling picked up during the afternoon and it took the indices clearly below the trendlines I mentioned this weekend in the video. Things looked bad for the bulls at that point, but then out of nowhere, stocks bounced sharply in the final hour and closed off their lows, which completely muddles the picture even more for this market.

Technically, the indices still did close below their trendlines, and just under their short-term moving averages, so maybe the late bounce will prove to be nothing. I really would have liked to have seen a close near the lows however. Support for the S&P is around 851, which is close to where it bounced from today. Next levels of support for the Nasdaq is around 1477. The VIX was never up that much today even during the selling and actually closed lower. I have no way of knowing what this means anymore.

As for my trading, I was able to be near my computer this morning and I did put some shorts on in individual stocks as I saw them breaking trendlines. I shorted CCI at an average cost of $16.87, NDAQ at $24.10, and BWLD at $24.60. The BWLD short was the only one that didn't work right away, as it spiked almost a point in about thirty minutes and quickly hit my stop at $25.31, giving me a 3% loss. When I got back to my computer in the afternoon, I added BDC as a short at $18.36. All of these looked very good when I left work around 3:30. When I got home, I had a different viewpoint. That late bounce took away most of the profits I had in these shorts - always gotta love that.

I also took a position in SKF at $120.17 in the afternoon, but the late bounce took me out of this at $117.95, giving me a 2% loss. That was a lot of fun as well.

Overall, I really thought we could get a trend going after watching the market action most of the day. I knew volume was lower, but I didn't think that would matter much being it is expected. The late bounce certainly throws a wrench in things, however, and we'll have to wait until tomorrow to see if it means anything. Perhaps I should have shut it down for real when I said I was considering it last week. Random pops like we had in the last half hour really frustrate me and continues to make trading anything for more than a half hour a very difficult proposition. Yuck. Hopefully I'll get some guidance from my scans. Take care.


Gio said...

Hey Mac... maybe when the Dow is down -200 points and the Vix is up 9% would be a good time to short... otherwise, this market continues to be full of trickery. and as I've learned from your last video, it kind of gets that way near the 50dma.


Mac said...

Trickery seems to be a good word I guess. I leave work around 3:30 each day and get home around 3:50. I can't tell you how many times this year I've left feeling pretty good about my positions only to see they have totally reversed while I am driving home.

We'll see what happens tomorrow, but those trendlines were still broken today.

szaman said...

Goof thing I closed out my SRS,SDS,QID by 2:30 with some profit. AAPL just killed me today.

Gio said...

... these low volume selloffs are making me feel bullish.

If the economic news on this shortened weekend gets the Vix back near 50, then I'll probably get long aggressive in January.