Monday, March 28, 2011

State of the Stock Market - 3/28/11 - "Boring is Good"

We saw a slight pullback today on Wall Street, which is not a bad thing at all if you're a bull.   Stocks started the day up very slightly but faded into the close.  Trade was slow however and boring days like this are perfect for a market that was overbought.  Volume was ridiculously low - by far the lowest levels of the year from what I can see on the Nasdaq although I don't have the final totals. 

For me, as long as the Nasdaq holds the 2715 area, I have to lean to the bullish side and will look for setups there.   There were a few stocks I have on my watchlist that look very tired after today, but most held up well.   A few more days of pullback, as long as it is calm, will be a very good thing for the possibility of this rally turning into something more. 

Now, to be fair, all of the short setups I shared in this weekend's video still look very viable as well after today, so I am keeping my eye on those too.  It would take a heavy volume selloff of significance (over 1% at least) to have me jump back on the bears' wagon, but if that's what the market tells me to do, I'm not going to fight it.  As I discussed in this weekend's video, there were lots of things wrong with the recent bounce so higher prices are in no way a given the next few weeks.

Keep your options open right now - I must respect the buy signal flashed last week along with the price move on the markets recently, but I am treading lightly at this point (still 100% in cash).   The market is still overbought and needs a little rest.   If we get one or two more days like today, then Thursday or Friday could be the time I start putting money to work as setups reemerge.   Take care and good luck Tuesday.

1 comment:

DrVanNostrand said...

My shorts got run over last week, the primary trend is still up but I don't see much in the way of attractive longs yet but if this market couldn't crack with the geopolitical mess in N Africa and the Middle East as well as the tragedy in Japan, the market had every catalyst it needed to put in a more serious correction. This makes me think we are headed higher and I think you are right Mac about letting things base out a bit here and set up some entries.