Thursday, February 24, 2011

State of the Stock Market - 2/24/11 - "Choppy Action"

We saw a really, really, really choppy day today on Wall Street - stocks started the morning higher, gave all of those gains back in a big way from 10:00 to 2:00, but then bounced into the close (before of course giving some of that bounce back at the end of the session).   It was positive to see the Nasdaq hold above yesterday's low and above the 50 day moving average again, but given the selling we have seen the past two days, the bounce could have been much better.   Volume looks like it will be lower.  

I talked yesterday how it is going to take some time for us traders to really know what the market wants to do from here - go south even further or firm up and continue to upward trend.   We may over the next week or two see a lot of sessions like we saw today, where the market is chopping all around.  It makes it tough to swing trade, and I continue to believe cash is the best option here until things settle.  

That being said (and what I discussed dealt with the market as a whole), I still have my short position in QID going and also entered three longs today, two of which are earnings plays - one this morning and one just now after-hours.   The morning entry was up 20% today as it beat estimates handily and I am hopeful of further follow-through.  I am up about 6% in that position as of now.   The after-hours trade was posted on Twitter.  These earnings trades continue to work well overall and are really the only trade I am comfortable with making with the market as it is.  The other long was a pocket pivot that is only a small position. 

So why I am talking about cash but then going out and starting a few positions?  I really don't know - sometimes you see trades that you think will work and you disregard the overall market.  Do as I say, not as I do I guess, right???

Good luck tomorrow - I kind of expect another attempt at a bounce by the bulls here but that is strictly a guess.   Maybe that's why I have a few long positions.  If we see a break of today's lows, however, all bets are off - things will really ugly really quickly.   Take care.

1 comment:

DrVanNostrand said...

Mac: I was also tempted to nibble on a few longs today even though I am far from confident that we are going straight up from here I think it makes sense from a risk reward perspective to try a few longs I am in NVDA as it looks like it might be in the bottom range of its base and EBAY because I like how it closed above the 20dma...we will see how things play out