Wednesday, February 3, 2010

State of the Market - 2/3/10

Today was a pretty slow day on Wall Street and because of that, I don't have a whole lot to say. Stocks started out lower, bounced quickly, but fell right back down to new lows by lunchtime. They righted themselves, however, and were able to take back much of the earlier losses by the close. Overall, it was a very choppy day and it looks like volume was lower as well.

Technically, not much really happened today - it was bullish to see stocks close off somewhat off their lows but given the low volume of the previous two days, you have to ask if they are running out of steam in the short-term. I see a lot of bearish setups in the sectors I follow - XLF, RTH, USO, XLE - all look like they want to head lower. Maybe they will - it's is probably too early to tell.

After going through my scans last night, there really isn't much that I am interested in at this juncture on either side of the market. There are a few longs that look good like XTEX and CROX, but I also saw a lot of longs hit some resistance around their 9 day moving averages off their oversold bounces that started Monday. Most of the patterns I see are sharp, "V" shaped ones and those are typically not my favorite. There are a few shorts that look good but after being burned earlier this week I am a little gunshy.

I am still in my COH short from $35 and right now that's it. I made an awful trade last night - entering SOLR after-hours at $7 based on its earnings release. It faded mightily from there, and I exited this morning at $6.46, giving me a large 8% loss. I try to avoid those type of losses whenever possible, but sometimes you'll have them. They suck and I am hopeful I can at least take a lesson from it - earnings plays normally work well but it is risky buying after-hours.

Overall, I think we are still in "no-man's land" right here as the market could very easily test its 50 day moving averages soon but at the same time could easily lose steam here and continue selling off. To be completely honest, I don't have a good feel for which one of those outcomes it will be so all I can do is wait and see. I think that's probably the right outlook for now. Good luck Thursday.

** On second thought, after looking through my scans, those short setups are popping up again so I guess I have to lean a little more bearish. I just know what trouble that got me into earlier this week so I am hesistant. I'll post some charts on Twitter later.

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