Tuesday, May 11, 2010

State of the Market - 5/11/10

More chop today on Wall Street - the market opened the day much lower, moved straight up from there to post nice gains, and then gave those gains away from 2:00 on to end up finishing flat.  All in all, a day I certainly did not miss as I sit here in cash and still quite disengaged from the market.   I haven't gone through any scans in about five days but I am guessing charts still look very messy and almost untradeable.   Cash remains the best option for me and I think it remains the best option for most traders whether they want to admit it or not.   Things are still very much up in the air with this market and news continues to drive trading. 

In the blogs I read, I hear most people expecting the market to fall quickly as it approaches its moving averages (which it is doing now) and then continue lower.   I overall agree with them, but I would guess the process will be much trickier.   If you want to get short, then just by the looks of the charts, now might be a perfect time to do so.    In terms of potentially putting longer-term index shorts on, I would probably wait but that's me - I am not real confident in anything market-related right now.   I would rather wait for a few bounces that test the 50 day moving average (which I would guess will come) before putting those longer-term positions on. 

Gold broke to new highs today (luckily I was stopped out on April 16 after a one-day spike down took me out).   This is the only other area I would consider right now besides shorting the indices.   I expect some continued whipsaws here as well and would wait for some consolidation, but the catalysts are certainly in place now (and were in place well before this actually) for gold to continue to move to new highs.  Watch it.

Good luck tomorrow if you're trading - for us swing traders that would like to hold positions for several days to several weeks, it remains a market that is best to abstain from being a part of.  I mean really, can any of you confidently predict where we will be a week from now with as much volatility as we are having?   It remains really tough and discombobulated.  Take care. 

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