The lack of volume made it quite easy to push around stocks today. Buyers weren’t in the mood to bid up stocks, but there weren’t enough sellers to really make today’s selling too meaningful. Institutions were on the sidelines today a good sign with the price declines. This recent confirmed uptrend has always seen support at the lows of the day, but today it wasn’t the case. If you thought Friday’s volume was going to be easy to surpass, today’s was even easier. A good day of consolidation for the market overall and days like today are needed to coil the market for higher moves.

There were a few leading stocks were able to shine today a decent sign for this uptrend, but with the NASDAQ sporting 5 days of distribution we do have warning signals. Back in the fall of 2009 we saw the market notch 7-9 days’ worth of distribution and yet we were able to bounce back. Tough to say we are in a similar situation with the NASDAQ sitting just underneath its 200 day moving average. However, if we break down from these levels we’d view that as a very negative signal. The best tell is your portfolio, if you are in leaders you’ll know well in advance if this market is going to breakdown. Right now, we are in a holding pattern.

This recent uptrend has been odd in the sense we simply do not have HUGE accumulation on the way up. Hey we can accept a follow-through day on volume lower than the 50 day average. However, normally volume will find its way into the market quickly. We just haven’t seen volume come in at all. Mutual funds do have record low cash levels and may not be able to support their favorite stocks. There are more explanations, but the fact of the matter is price supersedes and for the moment price is moving without too much volume.

A question how to trade stocks in this environment is and will be difficult. The wild intraday swings can and does make it difficult for many to hang on tight. Cash is a great place to be to dampen the volatility in the tape. Do not be afraid to use cash as a position, it is a very effective tool in your trading arsenal.

Cut your losses short!