Another very bullish session today on Wall Street, as the indices tested the support levels I mentioned yesterday early in the session, retested them several times later in the session, and then rocketed up into the close as the support levels held properly. The only thing I didn't like about today's action is that volume looks as of now to be very low, even compared to last week's levels. That is not bullish.
Technically, the 835 and 1600 levels proved to be very important on the S&P and Nasdaq respectively, as both were tested several times today and held. That is very bullish and until those levels are broken along with the uptrend line, I have to give the bulls the benefit of doubt here. A break above 865 and 1660 would give the indices another higher high which would also be impressive. We obviously remain overbought on some indicators but that doesn't seem to matter right now. The only thing I would worry about is volume - I want to see it increase on up days and decrease on down days. The past two days have seen the exact opposite of that.
Today was a lot of fun for me...not. When the levels I mentioned yesterday held at the open, I decided to go long a few stocks. I went into BAC at $9.59 with a stop below $9.40, although I was also watching FAS and WFC at the time and both would have been better choices. I also went into RGR at $11.35 and SOLR at $7.19 as both made nice early moves. I was a little late on both but didn't want to just jump in too early. When the morning bounce failed, I was stopped out of BAC at $9.38 for 2.3% loss and moved my stop up on the RGR position to about breakeven. That stop was also hit at $11.29, giving me a small loss of 0.7%. I thought this one looked very promising early on, but the close was not impressive at all and it now looks like it is not ready to break out yet. My SOLR positon is still on the table with a slight gain.
I am very frustrated right as I can't seem to win. I knew to play the market long today in the first half hour of trading, but came away with absolutely nothing overall. I think if I didn't have bad luck, I'd have no luck at all. FAS, WFC, and BAC were all sitting on my quote screen this morning and for some reason, I went with BAC. I was expecting a big move. When it finally moved up to around $9.80, I had a small gain and figured it was good to go for the rest of the session. I felt comfortable keeping my stop below the low of the day at that point, figuring it would not get there. Well, it promptly reversed, went to new lows, and then zoomed higher the rest of the day without me. Looking back, however, I don't think I would have traded it any differently. When it lost that momentum early in the session, I didn't like what I saw. The thing that is even more frustrating is that both FAS and WFC never came close to testing their lows for the day, and I would have likely still been in either of those positions right now if I chose them instead of BAC. I honestly don't know if that's bad trading or bad luck or a combination of both. Whatever it is, I know it is extremely frustrating. I think I just need one or two nice gains to get my confidence up, but I just can't seem to get them. I would be looking at gains of over 20% intraday today if I just would have chosen FAS instead of playing BAC.
After today, the play continues to be on the long side, as the bulls continue to hold support and show strength. I still have my doubts about how much longer we have on this rally, and I will be keeping a close eye on volume over the next few days, but I don't want to fight the trend right now - I have to respect it. I can only hope that I have some better luck over the next few days if I add more longs, which I may do. Good luck Thursday and take care.