News about more explosions out of Japan continued to rattle the market and it wasn’t just the nuclear power plant. Nikkei closed down more than 10.55% after sellers hit the market hard after new explosions were heard and seen. US Futures took a big haircut as fear had its way throughout the overnight trading session. Even a positive Empire Manfucturing figure couldn’t help stop the bleeding during the early going. After the ten o’clock hour the market began to move off its lows and move quite nicely. Volume soared as investors rushed out the market in the early going, but the run rate continued throughou the day acting like a day of capitulation. Despite selling in the last twenty minutes of the session stocks found support closing just off the highs of the day.
Was today the bottom? No one knows for sure and guessing simply won’t get us anywhere, but from the February 18th high to the low of today’s market the NASDAQ corrected just under eight percent. Enough of a correction for this market to push higher surpassing February’s high? Perhaps, but this market has a lot to do prior to making another run at multi-year highs. It would be nice to see the market trade in a tight range over the next few days giving everyone a breathier. A weak rally attempt would signal the lack of interest from institutions and have us going for short setups. However, if we find leaders are moving with solid price and volume action we’ll jump on the long side. We’ll allow price and volume dictate our actions rather than guessing where things may go.
We have been cautioning Big Wave Trading members selling was going to intensify and we finally got it today. We’ll know soon enough if this was a precursor to things to come or if today was the day of capitulation and we move higher. Sit tight and wait for proper signals from this market before taking on any risk. We are in a “show me state,” where this market has to prove its worth to get long in size again. If it does, so be it, if not, we’ll get after our short targets.
Remember, patience is the key to the game and always cutting yourlosses is the best way to protect your backside.
