Monday, June 14, 2010

State of the Market - 6/14/10

 Another volatile day on Wall Street today as stocks tried to clear very important resistance early on in the session and looked to be successful doing so around lunchtime.  Stocks opened slightly higher, consolidated a bit, and then pushed themselves higher and by 11:20, they had large gains for the day.  That, however, was the top as stocks sold off for the rest of the session, slowly at first, but then licking up steam in the final few hours.  News of a Greek downgrade by Moody's supposedly set off the afternoon selling.  Regardless of what caused it, it was not bullish action.  Volume appears higher than Friday but still very low overall.

Technically, I said in last night's video that today would be important and it very well could be.  The descending trendlines on both the Nasdaq and S&P were temporarily broken to the upside during the morning.  The key 1105 area on the S&P was not broken however (it came mighty close) and from there stocks just reversed in a very bearish manner.  Now, with as volatile as this market has been, we could gap right back up tomorrow over today's highs, but on the surface, today looks bearish and I expect the market to sell off for at least a few days.  With the market as overbought as it's been since this selloff begain in April, I think there is a good chance 1040 is tested again - this time it might not hold however.

I actually came off the sidelines today and made a few trades - we'll see how they go.   The first one was not good - I shorted BEXP at $18.23 near the open.  By 12:00, I was out at $18.74.  That gave me about a 3% loss.  I would have still had this position if I gave it more room, but I respected the possibility that the market could take off here, and so I kept my stop fairly tight.  Later on, I went back into the short side with FCX at $66.13 and CRZO at $19.93.  If you checked out last night's video, most of the short setups shown look very good right now with bearish reversals all over the place.   I posted a few of the better ones on Twitter intraday as well.  Meanwhile, I saw very little moving on the long side for most of the morning which was a clue that the market was weaker than it seemed. 

We'll see where we go from here - I have to admit that I am nervous holding overnight right now because of how crazy this market has been but I am still in mostly cash so that helps calm my nerves.  I would love to be more aggressive here but I just can't due to the volatility.  I also have not seen many people (at least that I follow and read) expecting a sell off here - most seem to be expecting a further move higher.  As I said this weekend, unless we get some major buying to show up with volume, I have to trust my indicators which are still bearish and technically, this looks like a very logical place for the market to break back down a bit.  We'll have to see if it is that easy - my guess is no just because nothing has been easy for the past two months.  Take care and remain careful.

Oh, by the way, I realized today when I started writing this post that last night's video was my 1000th post overall.  For me, that's a pretty big deal.   I didn't really know where this would go when I started blogging over 2 years ago, but I am happy to still be writing and hopefully somewhat relevant after that long.   I thank all of you readers that continue to read what I put out, and as always, please let me know if you have any requests or suggestions for the next 1000 posts (God willing).  I am always open to suggestions and comments.  


positiontrader said...

Congrats on the 1000st blog post Mac! Keep up the great work!

CW, Portland Or said...

Good job....your blog is the first one I read after the market closes. Keep up the great work

The Average Jay said...

Congrats. You got a very good blog here. I will keep reading.


Kotla said...

Congrats on your 1000 post.. great work..

MarshalN said...

Congrats on 1000 posts!

Bill C said...

I have listened to many traders over the years but you showed in tonight's comments (which were very well written) not just your expertise, but the nagging doubts, frailties, and lack of faith we all fell when trading. Most who post do not show that and can lead readers into a false sense of confidence. I feel very fortunate to have found you (last night), and i followed your advice this morning. yes, I was early but fortunately held on. It WAS very scary.

Anonymous said...


Your blog is great. Congrats on your 1000th post! Thank you for all the ideas and analysis you have given us. They help me to understand the markets and trading techniques.....I read it everyday.


Mac said...

Thanks everyone.