Once again sellers ruled the day as fears over earnings continue to grab ahold of the market. The morning part of the session wasn’t all that bad, but sellers unloaded on the market pushing stocks to their lows where they would remain. The market did close near the lows, but those lows were set early in the afternoon. There was support at the lows keeping the market from freefalling. However, it wasn’t enough to send stocks well off their lows. Another day of distribution certainly spells quite a bit of trouble for this market. Raising cash in the face of this ugly market is the best course of action. Our uptrend starting in June is now over and we await a new trend to begin.
Too many days of distribution have piled up on the market to keep long positions. We could very well turnaround and push higher, but given the price and volume action recently the odds are not good. Even with QE forever nothing is 100%. There are plenty of predictions of what may lay ahead of the market, but they are just opinions. We know a disciplined approach; a rules-based approach is the only way to be profitable in this market.
Tomorrow’s Vice Presidential debate should setup some fireworks for this market. I am certainly looking forward to seeing one liners coming from Biden (O-Biden from Palin). Personally, the Vice Presidential debate won’t do much for me as what I care about is how the market reacts. Wherever the market takes us we’ll go. Our opinion could be we should see New Highs doesn’t fuel our decision making. At the moment, what we are seeing from leading stocks and the market any opinion the market will be higher should be re-thinking their opinion. Better yet they should scrap it and follow the price action of the market.
It is easy to say we are going lower because it is obvious. We are even more oversold than yesterday (Captain Obvious). At this point we cannot rule out a bounce to relieve the oversold condition. Remember, to cut your losses short even if you are going to enter into shorts here. Keep nimble.