Tuesday, May 24, 2011

No Panicky-Type Selling Means No Bounce Attempt

If you read my post last night, you know I was expecting a bounce soon, perhaps today.  That obviously didn't occur and when I saw the market open a few points higher, I scrapped my plan of covering shorts and buying a dip for a few day swing trade and instead just held them.  I actually added a short in DKS today instead.   What I was looking for (further selling from which the market could bounce from intraday) did not occur so I changed my plan.

We're still at levels where a bounce can occur but I think the problem this week is we have not had that really heavy day of selling (intraday).  Yes, we were obviously down a lot on Monday, but basically that was a gap and then a sideways move - there was no intraday selling.   Today we saw some at the end of the session (it was a nasty close) and maybe that will carry through until tomorrow.   For me to cover my shorts and perhaps try a long swing trade, I would need to see the market show at least a little panic selling and I don't think we've had any yet.  I am waiting and watching.

Right now, I am content with what I have and will only make moves if that slightly panicky move intraday occurs.   I am kicking myself today a bit as I passed on making a anticipatory buy in silver yesterday even though I've been tweeting and writing about it for a few days now.   Oh well.  There are a few movers on the long side each day but they are few and far between and best left to day traders.   I really saw nothing worth watching on the long side in my scans tonight so if I go long, it would likely be with ETFs.

Based on today's action, stay patient and defensive.   If you are riding shorts, keep riding them until the market presents an obvious opportunity to unload them.   Hopefully you're not carrying any long-term long positions.   Tomorrow should be interesting.   Good luck.


Esther said...

Interesting divergence as the metals head higher while stocks continue lower. At some point, the dollar and the stock market will head lower in lockstep to indicate a repudiation of American fiscal irresponsibility. If that process has begun, we could soon see action that would surprise almost every analyst because it runs counter to recent history: financials getting slammed as commodities rise.

Chris said...

Good work the last few weeks, another possible short you should examine is Krispy Kreme, KKD. Big pop on earnings and a possible exhaustion play with fading volume, I got short 8.62 today covered half near the close at 8.37 playing very tight to the vest on that, but holding other half overnight hoping for close under 7.50 tomorrow.

Mac said...

Commodities have acted well the past two sessions Esther - dollar hasn't really broken down that much either. Interesting to watch going forward.

Thanks Chris - I don't like shorting stocks that are making new highs so KKD is not on my list.

Chris said...

And what of China? What affect will these rumours of them buying euro have on the currency markets?