Thursday, August 26, 2010

State of the Stock Market - 8/26/10

Quite the day on Wall Street today, as stocks opened up slightly to start the session, but when they couldn't get much traction going, they started selling off hard.  The selloff wasn't as brutal as the one we saw Tuesday morning, but it was still bearish, and stocks closed with losses.   Volume looks to be lower. 

I'm not going to write a ton today because I talked about key technical levels to watch yesterday, and those levels held very strong today on the upside move.   We'll have to see if yesterday's lows become a new support area.   Until the markets are at least over their short-term moving averages, I won't be looking at any longs.   Trader Stewie made a nice tweet yesterday when he said, "There is a time when it's too late to short and too soon to buy. I feel we are in this zone right now."   I really think that is true right now.   The bulls proved how very weak they are today, but we are still quite beaten down and reflex bounces can emerge from anywhere.   The past three days have been very difficult and I am sure quite a few have been chopped up. 

I am in cash and will likely remain that way until at least Monday.   If we bounce, I am looking it as a shorting opportunity, nothing more.   It would take some serious buying to convince me that the damage done over the past two weeks can just disappear.  If that happens, fine, but as we enter a historically bearish time of the year, I think we are not done moving lower.   Plan accordingly.   Take care.

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