Friday, August 28, 2009

State of the Market - 8/28/09

Are you having any fun yet? That's the only question I can think of to start off today's market summary, as the market played a trick on the bulls today after playing a similar trick on the bears last week, all the while going virtually nowhere. Pre-market futures were up big today as a few tech giants reported good numbers or raised guidance, and both the Nasdaq and S&P opened at new highs for the year. Well, that was the high point, as stocks immediately started fading the gap up and sold off all the way from the open until around 1:00. They bounced back a bit for the rest of the session, but still finished well off their highs. As disappointing as yesterday had to be for the bears, today has to be at least as disappointing for the bulls. Volume appears to be lower on the S&P and higher on the Nasdaq.

Technically, what can you say? This market is just chopping around and likely chopping traders up in the process. The S&P opened exactly 1.5 points above its former high at 1037 and then fell straight down. The reversal on the Nasdaq looks a bit worse as it had a bigger intraday swing. This certainly looks like a mini bull trap At the same time, the bears still couldn't push this thing that much lower and stocks were able to finish a bit off their lows. Neither the bears or bulls seem to have much strength here and that is probably why we have such a muddled technical picture right now.

At the risk of sounding like a broken record, I did nothing today once again and remain in cash. As I showed in the video last night, the lack of good setups really stood out to me and took much of my brief bullishness away, and I guess that was proven to be the correct outlook at least for today. Day traders have to be loving this market as the moves being made in junk stocks like AIG, FNM, and FRE are tremendous, but I can't day-trade these (especially now that I am back to work). They are so unpredictable and have no concrete reason to be moving higher, so holding them for more than a few hours seems too risky for me. I continue to see very few nice swing setups and until I do, cash is it. I don't like it, and I am getting a little bored, but there is no use in fighting it. We are just in a crappy market here (emphasis on the crap part) and all we can do is hope that it improves and the setups come our way. But when you start trying to force things, you usually get yourself in trouble, and that is not something I have any desire to do.

I will go through my scans as usual this weekend but don't really expect to find much. If I do, I will share as always. As for now, I plan on not thinking much about this market and enjoying the weekend instead. I recommend you do the same. Take care and have a great few days ahead.

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