It always takes a few days to get back into the swing of things trading-wise when you are away from the market for a few days, so bear with me, but it seems like it is extra difficult in a super-volatile market like the one we continue to have. Today was looking like a decent day overall for Wall Street, as stocks digested yesterday's reversal and moved sideways for most of the session. However, around 2:00, when Ben Bernanke started speaking, the market tanked and although they bounced just slightly back into the close, the damage was already done and the indices across the board ended up with large losses. Volume looks to be lighter.
I did a short video this morning to catch myself up a bit and overall, the market did look relatively bullish. After Friday's massive selloff, the action on Monday and especially Tuesday was very bullish and there was reason based on the charts to be somewhat optimistic. As such, I put some long setups that were looking good overall as well. Ideally, if yesterday was going to be a key reversal day, you would have really liked to have seen follow-through today. While the selloff today doesn't kill the possibility that we still move higher from here, it does reinforce the idea that we are back in a very news-driven market that has little volume and therefore extraordinary volatility from day to day. Perhaps we never left that type of market - it's been that way for a while. As I've said many times, it makes swing trading very difficult.
I read a quote from Upside Trader this morning that I thought was very interesting - "If buy and hold is dead, then swing trading is in stage two of pancreatic cancer. Long term has become maybe a day or two (if that), and the whippiness has been epic." I get the sense that a lot of traders are feeling that way right now. I know I am and have felt like that for a while now.
I am 100% in cash (still) and although I watched some stocks this morning, I don't feel much of an edge going short or long here, so there is no reason for me to do anything. We have some big reports coming out tonight (NFLX, BIDU, ISRG, EBAY) and I honestly would not be surprised with the market being up 2% or down 2% tomorrow. When you have that kind of outlook, it is hard to do much. The bulls aren't dead here unless Tuesday's lows are broken, but I don't think the bears are dead either unless the S&P can get above today's highs and stay there. We'll just have to watch to see who wins. Good luck Thursday and be careful.