Volume Falls off a Cliff as Stocks Sell-off in the Final Hour of Trading

Traders suffer from Superbowl hangover as stocks slide in the final hour of trading.  Volume sank by more than 25% across the board as institutional traders weren’t in the mood to move stock.  Debt fears and Iran’s defiance may have played a part in the late day sell off.  However, volume seemed to continue its downward spiral even during the selling.  The lack of support coupled with the lack of volume rendered day two useless in the grand scheme of the market.  Our correction remains intact as day two of the current rally attempt goes out on a low note.

One thing of note is the market remains deeply oversold.  The current correction as mentioned in the past isn’t long enough to our liking.  With that said, the market will do as it may, but the current correction is interesting.  Many indicators are so deeply oversold that it would almost be a surprise for us not to rally.  Therefore, cash is an excellent place to be until the muddy waters clear.

A rally would certainly help set better short setups as we are tracking a few at the moment.  Financials continue to be a very weak sector in the market.  We are looking at a few shorts and have already had a few early signals in some names.  However, they aren’t proper setups just yet and any rally will help set these proper setups.  We will stay patient and wait for these proper setups.

Staying disciplined for a speculator is the number attribute you must retain and practice.  Often times we see many speculators try to catch too many moves and cover too many stocks.  It is best to stick to your game plan and not deviate from it.  Be prepared upfront to deal with any situation that may arise.

Much is being made about the sovereign debt issue in the European Union that it has made its way into Main Street.  Many of these countries are so small compared to the United States that many of our state economies surpass them.  In the end, US banks and investors hold very little of this debt and would not be severely impact by any one of these countries defaulting.  In the event of a default, it may drive foreign investors to the mature developed countries helping out the US Dollar, Stock Market, and Debt markets.

Cash is a viable choice to sit at the moment whereby the long side is quite simply too dangerous to enter.  Not to mention the short side is too obvious.  Stay disciplined and do not try to be a hero in the market.