Well, to answer the title of this post, it was pretty, pretty bad. The Buy/Sell Difference measured by 4% breakouts and breakdowns was -1208 today. Yesterday it was -800. The cumulative difference of the past four sessions is -2311. Looking back over my numbers since late 2007, I could find only two other instances of a day of -800 followed by a day over -1000. Those dates were September 15 and 17, 2008, and a stretch from October 2 to October 8 or so in 2008. Since then, we’ve theoretically have not seen as bad a two-day breadth move as we saw the past two sessions.

I think it is safe to assume that the bear market that started right around July 27 has now regained its strength. I’ve been saying for a while that I believed we were indeed in a bear market and that the August lows would eventually be broken, but I’m not going to lie and say I didn’t have my doubts about this idea last week as the bulls kept pushing things higher. The market went just high enough over key resistance levels (2600 on the Nasdaq as well as the 50 day moving average) and there were just enough stocks moving higher that I am pretty sure I wasn’t the only long-term bear that was questioning things just a bit. Funny how the market can do that – pull people in just enough to cut their heads off.

This isn’t to say that things will be as easy as pick a stock to short and go from there. Unfortunately, I think this market will continue to make things difficult for anyone but day traders for a while. My guess of what happens over the next few days is that we likely test the August lows either tomorrow or Monday, and will likely break through them briefly before a reflex bounce rips the face off of the bears and takes us back into the short-term moving averages. We are very, very oversold so a relief bounce (even it’s just a day or so) can happen at any time. That is strictly a guess, but in this market, what else is there to do but guess?

If you are like me and cannot day-trade, I don’t have much to tell you in terms of a game plan here other than don’t do anything. Frankly, I am becoming rather disinterested in trading right now as it is virtually impossible to do anything but day-trade and with a full-time job, that’s not possible for me. The constant gap up and gap downs make starting positions at the open impossible, and the overall volatile trendless market (if that makes sense) makes holding positions overnight with stops and such pointless. My account goes up, then gives it back, then goes up again, then gives it back. It’s gone sideways for a while now and I am actually happy I’ve started back up with my full-time job because I can’t trade as much. It’s probably a blessing.

I am in cash here and will likely be for a while, but if you’re looking for ideas, I would generally say look to short any market moves into the 9 or 20 day EMAs. We could be up 3% tomorrow or down another 4% and it would not shock me. Heck, we could be down 4% early and close up 3% and it would not shock me. It’s that type of market. As I said on Twitter earlier, “We’re back to having absolutely no long setups worth anything after today but also being way too late to do anything short. Great.” What a great market indeed (yes, that was sarcastic).

Recommended Posts

Stocks

What Affects Stock Markets During the Earnings Season

During the earnings season, investors and stock market traders pay attention to many different variables that affect the stock market. This includes financial data and world issues. This article will cover these factors. Economic data Several major indicators, such as unemployment, GDP and GDP growth, can affect the stock markets. Although not every piece of economic data has a direct impact on the stock market, these indicators can trigger expectations of government action. One of the biggest economic indicators is GDP, which is the dollar value of all goods and services produced in a country during a particular time period. While a good GDP figure can boost share prices, a bad one can have the opposite effect. Another indicator is the Purchasing Managers Index. This is a measure of the growth of the manufacturing sector. A positive figure suggests that businesses are performing well and that their earnings are likely to increase. The housing and construction sector is considered an important part of any economy. The number of construction projects is another indicator of a healthy economy. High construction activity […]

SwingTrader
Charts

A Good Trader Uses Stop Losses Always

Using stop losses can help you limit your losses. Depending on how much money you have to lose, you can set a limit of one to three percent of your portfolio value. You may want to set the limit lower if you have had some losses recently. You can also choose to use a trailing stop loss. The downside to using stop loss orders is that they lock in your losses. This means that if you sell at $97 and then a buyer comes along, your order will be cancelled. It may also cause you to take a large loss if you place it too far off the current price. When you use a stop order, make sure it’s far enough from the current price to avoid a large loss. Stop-loss orders are often used by investors to limit their losses when they open new positions. For example, a trader might buy a hundred shares of a new tech stock at $25 a share. To avoid a large loss, he or she would set a stop-loss order at twenty percent […]

SwingTrader