Overnight we saw the Shanghai lose more than 6% on above average volume. Economic data fails to impress, but this is the norm. Selling was persistent throughout the session. The NASDAQ fell below its 50 day moving average in a sign this market is still in slop and chop mode. Volume was mixed with the NYSE volume ending the day higher and NASDAQ lower. We continue to see a mixed market and we are not expecting this to change any time soon. If this current market environment changes we will be right on top of it.
The end of summer is drawing closer, but we approach the worse month for the market from a seasonality stand point. September is not kind to stocks and given the current stalemate we have it will be even more interesting this year. The Dow Jones Industrial Average is trading has never traded in a more narrow range than we see today. The VIX continues to stay near 12-13 as investors do not expect future volatility to spike. We also know investors tend to use recent history as their guide rather than take the contrarian view. In this case, investors continue to believe we will trade in a narrow range. The possibilities are endless.
The worse thing you can do is fly by the seat of your pants. Without a plan you are asking for trouble. A clear and concise plan of action is what you need to succeed. Know your position sizes and your exits. Entries are the easy part. It is always the hard part investors always struggle with.
More summer trading should continue tomorrow. We are ready for anything to come our way. Are you?
