I believe this bounce is yet another shorting opportunity.
The main culprit is the VIX. If you look at the chart of the $VXO its right next to multi year lows. Its very hard for a market to sustain much of a rally off these super low levels.
Volume has been anemic at best. The theme of the past few weeks has been decline on heavy volume and rally on weak volume. It is clear that many big players are using strength to distribute.
The dow and nasdaq are diverging. To me this is a sign that the momentum to the upside has ended. Throughout the bull run the past year.. the broader markets were more correlated and there was strength across the board. Looks like traders are becoming more selective in their stock picking and the buy anything on the dip mentality has ended.
According to my own stats 60% of tradable stocks are above their 50ma and %50 are above their 20ma. Clearly the average stock is diverging relative to the Dow and S&P.
Just to clarify things and make it crystal clear before Mr. Waggie begins to attack me and discredits everything I am saying. I am currently saying that over the course of the next few days to weeks the market has a higher chance of continuing its move lower. It very well may be that the economic data tomorrow will revive this market and push everything up over the course of the next 1-3 days. However.. I will still be shorting into strength because I am not daytrading and building a swing trade. I will cover shorts and re-asses my bias assuming the Nasdaq closes above the 2100 level. Between todays close and 2100.. I think it is wise to scale into a short position. Notice! I use the word scale because I am not smart enough to pick exact reversal points.
I am starting this thread to stimulate discussion based on recent market action.. and I am curious as to what other traders think. I am not promoting a pissing contest ( waggie please control yourself).
--MIKE
The main culprit is the VIX. If you look at the chart of the $VXO its right next to multi year lows. Its very hard for a market to sustain much of a rally off these super low levels.
Volume has been anemic at best. The theme of the past few weeks has been decline on heavy volume and rally on weak volume. It is clear that many big players are using strength to distribute.
The dow and nasdaq are diverging. To me this is a sign that the momentum to the upside has ended. Throughout the bull run the past year.. the broader markets were more correlated and there was strength across the board. Looks like traders are becoming more selective in their stock picking and the buy anything on the dip mentality has ended.
According to my own stats 60% of tradable stocks are above their 50ma and %50 are above their 20ma. Clearly the average stock is diverging relative to the Dow and S&P.
Just to clarify things and make it crystal clear before Mr. Waggie begins to attack me and discredits everything I am saying. I am currently saying that over the course of the next few days to weeks the market has a higher chance of continuing its move lower. It very well may be that the economic data tomorrow will revive this market and push everything up over the course of the next 1-3 days. However.. I will still be shorting into strength because I am not daytrading and building a swing trade. I will cover shorts and re-asses my bias assuming the Nasdaq closes above the 2100 level. Between todays close and 2100.. I think it is wise to scale into a short position. Notice! I use the word scale because I am not smart enough to pick exact reversal points.
I am starting this thread to stimulate discussion based on recent market action.. and I am curious as to what other traders think. I am not promoting a pissing contest ( waggie please control yourself).
--MIKE