Wednesday, June 9, 2010

State of the Market - 6/9/10

"Weak" is probably the best word to describe today's action on Wall Street, as the market once again proved it cannot bounce for more than a few hours, let alone a few days.   After holding key support levels yesterday, the potential for a bounce was certainly there for the bulls, and early on today, it looked like it would happen, as stocks started higher and after a brief period of consolidation, moved nicely higher into lunch.   That was it, however, as stocks faded during the afternoon, slowly at first, but around 2:30 they picked up steam to the downside and gave back all of their earlier gains, finishing with losses.  Volume was lower.

Technically the market was rejected right near its 9 day moving average and the intraday action was terrible.  I showed some long setups last night in case we bounced but I also mentioned how it would take a move above 1110 and 2270 to get me really bullish.   Maybe it still happens (today's action looks very similar to 5/26 and the next day we saw a 3.7% move so who knows?) but the proof is in the pudding.   Right now, the bulls don't seem to have any sort of power and instead of getting chopped to bits like a lot of traders who aren't in cash and who aren't daytrading probably are right now, I would rather wait for some confirmation.   In addition, the more we test those 1040 and 2140 levels, the more likely we are in my opinion to break through them to the downside and have another move lower.   Those short setups that I showed in Monday's video still mostly look good and they bear watching.  

Not much else to say - all of these reversals continue to prove how high volatility is right now and it makes it very, very difficult to do much trading in an environment like that.   I haven't traded a single share in at least a month now and have no problems at all going another month or so doing the same thing.   It's all about getting the right setup and it is not there at this time.  Now if we break 1040 and 2140, then I would look to jump in, but until then, patience remains key.   Good luck and be careful. 

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