Wednesday, December 16, 2009

State of the Market - 12/16/09

A pretty boring and slow day overall today on Wall Street, as stocks started the day strong but for what seems like the millionth time reversed lower as new highs for the year were attempting to be made. From about 11:30, the market slowly drifted lower and didn't even get much reaction going when the Fed decision was released. A late bounce brought stocks slightly off their lows as they finished with very small gains. Volume appears to be lower than yesterday's distribution day.

Technically, the market once again fiddled with new highs and the top of the trading range, with the Nasdaq breaking slightly through yesterday's highs but as of the close, we still have not seen a new high close on either the S&P or Nasdaq. Normally, so many failed breakout attempts would signal a bearish trend on the way, but the market hasn't sold off either, which is confusing if nothing else. It just isn't doing much of anything right now and as such things are tough.

I made one new trade today - bought NLST at $6.10 early in the session - but once again I was whipsawed out of the position as it reversed. My stop was hit at $5.96 for a small loss. My stop was also hit on VISN at $11.45 for a very small gain as it showed absolutely no follow-through on its breakout from yesterday. I luckily made no others moves as several other stocks I was watching closely (namely CTFO) finished well off their highs as well. Momentum continues to be very spotty and I have just been spinning my wheels this week in the few names I have tried, so staying away might indeed be the best idea unless you're day trading them - I just need to listen to my own advice. I still have my SDS position but that's it.

We have kind of a weird market right now in that we continue to fail anytime a breakout to new highs is attempted, but at the same time the market continues to not sell off hard, especially in the face of a rising dollar. I would imagine both the bears and the bulls have to be a bit frustrated right now as neither can do much of anything. This current dynamic makes trading more than a few hours or so difficult and cash still is a good place to be - although I've made a few trades this week, I've remained mostly in cash the entire time. Today brought very little in terms of a catalyst via the Fed but perhaps it will just a take a day or two for the market to react. Or perhaps the market is already on its Christmas vacation and this chop is what we have to look forward to for the rest of the year. Let's hope it's the former of those two options and not the latter. Take care and good luck Thursday.

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