Wednesday, August 4, 2010

State of the Stock Market - 8/4/10

I wasn't really watching the stock market too closely today but on the surface it appeared to be a positive day.  The S&P and Dow continue to lead while the Nasdaq continues to lag and has yet to make a higher high.  Resistance for the S&P is at 1131 while the Nasdaq has both 2307 and then 2341 to deal with over the next few sessions.   A breakout is certainly possible here although my readings are getting just slightly overbought.  Friday's jobs number could have a big impact on things.

Although things look decent overall, to tell you the truth, I am just not that interested in doing a whole lot right now.   My trades earlier this week have affected my outlook on things greatly.   It is not that I am mad or anything - frankly, I haven't really thought twice about my decisions to enter those trades.   Perhaps it was because overall I didn't gain or lose anything.   I have had no regrets about any of the trades and would make them again.

What those trades have done to me, however, is put me in a state of questioning this particular market at this particular time more than I normally would.   I sense that we are in an even more "random" market setting than normal.    There could be many reasons - summer volume is low, HFT, earnings season, whatever.   As I go through my scans, I see setups that looked great fail, and I see stocks that looks very iffy go up.   I see some earnings plays follow-through nicely, and I see others that appeared to post good earnings as well just reverse hard and tank.  I can't for the life of me figure out exactly what is making some of those go up and some of those do the exact opposite.   I can honestly say that right now, when I look at a chart, I feel I have no reasonable expectation for what will happen next.  

Normally, if you see a chart that looks bullish, you would expect at some point it moves higher.   Right now, I can't say I expect that.   There are a few charts that look good to me right now from a traditional technical standpoint for various reasons - MNTA, SPRD, SHOO, NZ, SWIR, AONE, CNAM are ones on my watchlist at this moment.  But I really don't have much interest in playing any of them because I get the sense that, again, the outcomes are just completely random.   (Actually, I should share that I am seeing a brand new technical pattern emerge in many stocks - I'll call it the breakout failure reversal pattern where stocks breakout, reverse lower hard on heavier volume, and then just rise right back up to new highs.)  

Sometimes I get in a mindset where I just lose interest in the market for various reasons and I think I am in one of those "funks" now.  I am not complaining - just sharing my thoughts and observations.   I have no reason to think we won't keep moving higher from here, but something doesn't seem right to me.   Take it for what it's worth (probably not a whole lot).  Good luck Thursday. 

5 comments:

The Average Jay said...

(Actually, I should share that I am seeing a brand new technical pattern emerge in many stocks - I'll call it the breakout failure reversal pattern where stocks breakout, reverse lower hard on heavier volume, and then just rise right back up to new highs.) I think it is just prue manipulation

Jay

Fai said...

IT is not at the consolidation stage, thus no one know what is going to go up or down. Until some of the resistance to be broken, then it will be clear. it is in trading range, not trend. so you need to use different indicators than the ones you are using.

Fai said...

we are in trading range right now, not trend. who can make money in this market is good

l2ich84 said...

This market is tough to reason. In all honesty, I have found the most success trading this market with a completely ignorant and empty mind. No news, no stocktwits, or any forums, just purely watch price action and trade momentum (mainly up). The market manipulation is through the roof right now imo.

bmbull said...

Maybe this is one of those times where "if you don't feel you have an edge, don't trade."

I'm feeling the same way. As a 'trend trader', I don't feel like I have much of an 'edge' in this choppy market.