Wednesday, March 16, 2011

Not an Easy Selloff to Maneuver

While I am happy to be directionally correct on this selloff, I will admit this is one of those times that talking about the trade/direction of the market has been much easier then than executing trades on it would have been.  While we are once again at lows of the move (lows which I DO NOT expect to hold), the constant late day rallies have caused havoc, and made any tight stop loss strategies difficult to work with.  Yesterday's rally - during the majority of the day, AFTER a gap down, was an example - as it made no sense.  So while on the surface this has been finally been a victory for bears, it has been like riding a bucking bronco .... especially when the rallies have come for no apparent reason and on little volume.

Again, as I said a week or two ago, if we broke the 50 day moving average support the problem for bulls is there is no real secondary support for a long while.  That is a condition of a market that effectively (aside from a 3 week break in November) went straight up for 6 months.... along with a short base that threw in the towel a few months ago.  The 200 day moving average is the next big time support level - if we get there, I'd be interested in going long for a trade.

Ironically the retail investor had just come back into the market per the inflow data about 6-7 weeks ago... just in time to be greeted with a slap to the face.

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