Just another day in paradise as stocks enjoyed another roller coaster session led by the Dow Jones Industrial average. Today was just another example of a lackluster market where even extreme oversold conditions cannot muster a solid session for the market. Even a washout of new lows from the market cannot entice enough buyers to flood the market. Volume was lower across the board, but we were able to at least count today as day one of a new attempted rally. Small caps lagged today as the Russell 2000 ended negative on the session. We have yet to see anything to give us confidence we are at a short-term low where a solid tradable bounce is about to happen. Cash remains king in this dismal environment for the long side of the market.
Bears still remain in control of the AAII survey with more than 48% of their respondents believe the market will be lower in 6 months. Just 22% believe the market will be higher. Not an extreme for bears, but you would think after back to back weeks of bears above 40% a rally would have at least taken place. Not for this market just yet.
Zerohedge had a nice article about a potential washout where there is an extreme number of 52 week lows. As a whole it appears we may have seen a washout. Forget the lack of fear in the VIX and any real leadership emerging. These extreme readings in new lows may signal we have a low in place, but there was one time in 1973 where it led to heavy losses. The way to combat this unknown is to simply have a plan of attack. Like ours. Right now cash is king and until we have proper signals and the market lines up in our favor we’ll be in cash waiting for our opportunity.
For those in line to get dumped on by a few feet of snow we wish you good luck. This market won’t be helping you any time soon either. Stick with it and as always we have our intraday trades at work! Have a great weekend.
