The market’s win streak comes to an end as volume ticks higher. Today’s session was a distribution day, but it was not all that bad. For now, only the NASDAQ and Russell 2000 have been rejected at their respective 50 day moving averages. S&P 500 still remains above its 50 day moving average. If we were solely focused on small caps it would be a bit more concerning. For now, we’ll remain patient with our cash position and our exit strategy if this market turns for the worse.
We do know a few traders who now are nearly 200% short and think we are headed for lower prices. There is always that possibility we turn lower. If you are this type of trading it is uber important you have an exit strategy. Shorting this type of market is playing with fire. Protect yourself from getting burned.
We remain patient with this market as we are not quite out of the woods with respect to seasonality. October is always a tough month for stocks and there is a potential we head south once again. On the flip side, notable market bottoms occur in October and we must be prepared. Stick with the plan.
More to come later.
