Tuesday, March 1, 2011

State of the Stock Market - 3/1/11 - "Coming in Like a Lion"

Not a very good day today on Wall Street, as the first day of March was greeted with a "gap and crap" performance.   The market did gap up to start the day but that gap was immediately sold and stocks slid steadily throughout the rest of the session, rarely even attempting a bounce.  Volume appears that it will be heavier, continuing the recent trend of heavier volume on down days.

I talked yesterday about how everything I looked at appeared bearish, including both the indices and individual leading stocks, but I honestly thought this market had some sort of curve ball ready for any bears out there.   I guess I've just come to expect it.   However, today played out just like it should from a historical technical perspective.   Heavy volume selloffs followed by weak volume rallies are traditionally signs of weakness in the overall market, and it played out that way today.   Perhaps the curve ball is still coming, but today's action seems to be telling us that this market is very weak and could be headed much lower.

I was stopped out of my final long this morning (HOGS at $18.50 - a terrible fill) and ended up with a 0.45% gain on that position.   My motto lately has been "do no harm" and so getting stopped out without a loss is sort of a win in this market.  Overall, I think I have been able to do OK the past few weeks with a few small gains, a few small losses and a 12.5% gain in BW (which after today you may see why I took my profits) 

Based on today's action, I did enter three short positions in some bigger caps names at the end of today's session.  I fought what I "saw" yesterday a bit but I can't do so two days in a row.   I may end up getting stopped out with small losses again just like I did when I went briefly short back in mid-January, and I'm OK with that.  Part of me kind of expects to just because of what I mentioned yesterday - is being a bear too obvious here?  The overwhelming evidence however says that either cash or going short is the proper play right now, so I have to go with it. 

Good luck Wednesday - caution remains warranted and hopefully you are mostly in cash or perhaps short some names at this juncture.  Take care.


DrVanNostrand said...

I think the S&P will test the 50day i went through a ton of charts and couldnt find any long set ups and I am more of a buy the dip (in an uptrend) trader than a buy the rip trader,so that says something about how ugly the charts are. The bull argument here is that we need some sideways basing before moving higher. If the market cracks the s&p breaks the 50dma then i will look to short rallies cash is king for now.

Anonymous said...

u know what mac, im very happy
and u mac, much appreciate to help me resolved some of the riddles tho i still dunno why u leaning bearish anyways, u helped lot of ppl.

great trader u are.

i will find it myself how to improve it, i recall your... time model or whatsoever, i 4got the name

god bless u mac

mini-me fr hongkong

Mac said...

Cash is definitely king Doc. Just like you said, there just isn't anything to buy right now. One of these times we will get a real correction - maybe it will be this time.

Mini-me, thank you. I am bearish simply because the market is telling me that's what I should be. It really doesn't matter what I think - just listen to what the market is doing and go from there.

marc said...

mac_ One of ur favorite names from the past HTHT may be bottoming today. volume coming in at the bottom here. similar to FXCM from yesterday and look what happened to that one

Mac said...

Very nice call on HTHT Marc - it didn't show up in my scans and I did not see that coming although yesterday's volume was the clue I guess. Nice work.