Up Until Now (?)
On Wednesday, the Nasdaq lapped open but quickly found
its high and sold off for most of the day. Then, early in the afternoon, it
began to chop its way higher.
The S&P also chopped around after trading much higher.
However, it under-performed the Nasdaq.
In spite of the fact that its 10-day moving average is
catching up with it, the VIX still remains somewhat stretched. Therefore, this
still suggests that the market has the potential to bounce.
Up until now, this has been one of the best summers in
memory. The market has been volatile enough to make short-term trading
worthwhile. And, more importantly, it has persisted in the direction of
the big blue arrow. Unfortunately, all good things must come to an end. Recent
choppy action has me wondering if we could be settling in to a more
“normal” summer pattern.
So what do we do? I’m surprised that we haven’t seen more
of a bounce from recent timing signals and an oversold condition. Over the
years, I have (painfully) learned that when the markets don’t do what I expect,
then I should stay out. Therefore, assuming you have been riding the trend down
up until now, probably the best thing to do is to continue to scale out of
existing shorts and trail a stop.
No setups tonight.
Best of luck with
your trading on Thursday!
Dave Landry
P.S. Reminder: Protective stops on
every trade!
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