Friday, March 4, 2011

State of the Stock Market - 3/4/11 - "Fun Times"

Fun times once again today on Wall Street, as yesterday's big rally and potential follow-through day was met with nothing but selling.   The pre-market jobs number appeared good on the surface, but perhaps the whisper number was higher, and that led to stocks opening flat but quickly falling.  There were a few bounce attempts in the morning, but they fell further into lunch, where they moved mainly sideways into the afternoon.  A late bounce took stocks off of their lows and makes the action look a little less poor, but the market still finished with decent sized losses.   Volume appears lighter.

Overall, this market is a mess right now as bulls and bears are getting chopped to pieces from one day to the next.   Sometimes you'll have markets like this - it just is what it is.  The key is to avoid getting too emotionally involved in them.   Do not become frustrated, because if you do, you won't be ready when the market starts to act more normal and you'll miss the opportunities in front of you.  

I remain in cash and really, until either the 50 day moving average is taken out to the downside on the Nasdaq and S&P or the highs from yesterday are taken out convincingly, I think I will be staying in cash.   Day traders may be loving this intraday action, but for me (who mainly trades at the end of each session) it is rough.  I would go so far as to say this week has been "untradeable" from a swing-trading perspective.   There is nothing wrong with sitting things out and waiting for the market to present better opportunities, and I do believe that's where we're at right now.  

Enjoy the weekend - I'll go through my scans as normal but I don't know if there will be that much to talk about in terms of a video given the trading this week.   We'll see.   Take care.


Anonymous said...

Hi Mac-

I have been trading for alittle over 2 years now and have came across your blog. I appreciate the commentary and information you post. It has been very helpful to me. Likewise, I hold a full-time job outside of trading, so I have to utilize swing trading vs day trading.

I've noticed that when the price action gets violent (as it has the past few days), it is either typically a top in the market or bottom due to the zig zag indecision.

Primarly what happened last year in summer 2010 where everyday was either a gap up or down +/- 1-2% every single day. At that point it marked the bottom before this huge rally.

So if this continues on with extreme back and forth, it likely may be carving out a 'top.'

-Mike H.

Anonymous said...

hi mac

tho there is a 50% intraday bounce from the day low, it hurts the daily candles. (reference 15-20nov2010) i decided to sell at least half of the stocks that i bought last year, i dun want my profit shrinks fr 20/30% to a single digit (4,5%) as things can happen faster than expected.

i have feeling that this is it. i will setup short position and tight stop loss discipline. as at that moment, i will buy back stocks if dow rallies above 12400 and stay over another 6-7 trading days.


Mac said...

Thank you Mike. I appreciate your kind words. You make a good observation about volatility marking tops and bottoms. It is certainly possible. Back in late April of 2010, the same thing occurred when we were up and down, up and down, and then eventually the market did top. We shall see - I'll do my best to be ready either way.

MM - I am not marrying myself to either side right now. Shorts could work but if we get above Thursday's highs, I would certainly not be shorting things.