Wednesday, November 9, 2011

This Market is a Blast...

A blast of frigid cold air that is as you leave your cozy, warm house on a dark February morning that punches you in your gut, leaving you gasping for air and wondering "where did that came from?"

Let me start by saying that I only have one long position on right now and have been mainly in cash over the past few weeks, so my rant here is not because I am angry about this big gap today.   Luckily, I shouldn't be hurt badly.   I have attempted to make some trades, but the success rate has been very low.   Breakouts seem to reverse back just as much as they succeed over the past week or so.   Earnings trades do move, but only after having crazy volatility and large shakeout moves after opening that would stop most sensible traders out of their positions (see FIO as a good example).   It's still a market in which it is very difficult to hold positions for more than a few hours because if you do, you're likely to see your gains go up in smoke, only to reverse as soon as you get out. 

It is what it is I guess, but that doesn't make it any easier to play.   We just saw three or four days in a row where dips were bought intraday.   Many of those dips came on less than rosy news.  This would normally be bullish - seeing bad news get bought.   We get more news overnight and now we're looking at a big gap down.   News-driven markets are always difficult to play, but I think this one takes the cake.   Not only is the news impossible to predict, but what seems really bad can get bought up in a heartbeat.  The next day, similar bad news can get you a big gap down.   This market over the past few weeks has done a great job at conditioning traders that things are OK even with bad news, and then - BAM - a punch in the gut. 

Right now, you basically have to guess what is going to happen overnight AND what the market is going to think about it to make money, or just stick to trading intraday.   I can't do that (intraday), so I guess I need to just continue to stay mostly in cash.   It's one thing for the market to sell off, but when it does it with a big gap down, it makes starting positions very, very difficult.   Swing trading is not very conducive to markets that gap up or down big at a moment's notice, but that's what we still have.  

I wish I could tell you how to play today, but I am really not sure.   It honestly wouldn't surprise me to see the market finish positive today, but a 3-4% down session wouldn't surprise either.   I've continued to see some nice setups in my scans, but today could very well eliminate many of those charts.  I guess I'll manage my one position and sit back and watch.   I shared both long and shorts this weekend, but big gaps like this make it hard to get started on the short side.   Oh well.   Have fun today and good luck - I'm sure it will be a "blast".


Anonymous said...


on 1 nov

as i said, the next bounce will be the final wave, and mac, dont underestimate the big wave tho we believe there is no straight fall, its a matter to determine how would u "hold your short position until the target achieves".


Rick said...

I haven't seen the market this news driven since Paulson was trying to sell the $700 billion bailout. Swing trading is like flipping a coin right now.