Thursday, June 9, 2011

Having Some Flashbacks to 2008

An old adage in trading says that "bull markets open weak and close strong, while bear markets open strong and close weak."  If the past week or two of trading is any indication, we must then be in a bear market, because the awful intraday action continued today.  I'm having some flashbacks to 2008 when the market always seemed extremely oversold but at the same time always seemed to go lower.  Although we were very oversold once again going into today's session, the "bounce" we saw was never very strong in terms of intraday movement and after grinding their way higher in a very laborious manner all session, stocks gave back almost half their gains in the last half hour or so of trading.  Again, not very bullish action.  

We may bounce a bit tomorrow and maybe because everyone is looking for a panicky type intraday sell-off from which to try some short-term longs from, we'll grind our way higher for a few days just like we did today.   Nothing would surprise me right now.   I continue to believe that any "bounces" are just opportunities to short, and anytime we get near the 9 day moving averages on the indices, that's where I would look to go back to the short side.   Right now, I remain mostly in cash except for two small long positions I entered today (ZAGG and OME).   I think shorting here is still somewhat dangerous.

The weird thing about this market is that although the action continues to look bad, I also continue to see some decent charts in my scans.  Not a ton, but more than I would expect.   I'm sharing some tonight just in case the market surprises everyone and grinds its way a bit higher from here over the next few days.

All Charts from Telechart, Courtesy of Worden Brothers, Inc.

If you plan on playing any long positions, trade smaller than normal positions and please keep your stops in place (and probably pretty tight).  I don't see many short setups here but any moves into short-term moving averages on individual stocks may work well as possibilities.  I just don't see many of those right now.  Good luck Friday.


Anonymous said...

Thanks Mac. Great stuff. I appreciate your efforts and read your commentary nightly.

Maher said...

Hey Mac,

I see you moved over to tc2000. How do you like it compared to Telechart 2007? Its still in beta so i'm sure lots of functionality is still missing.

Do you have the Gold subscription?

Anonymous said...

thx mac
pathetic volume on bouncing day, disappointed

Ed said...

Now is the time to trade long on the Euro, it seems the EUR/USD pair is gaining momentum and with the Greek issue and the e-coli calming down, i think they will continue their journey to 1.50.

Mac said...

I mainly use Telechart 2007 still but TC2000 is on my laptop and I didn't feel like turning on the desktop last night so I went with those charts.

The newer version coming out soon however looks very impressive and I will likely switch over then. I got a sneak peek and I liked what I saw.

Mini-me - no doubt a disappointing "Bounce"