Institutions were busy in the market today shown by the noticeable spike in volume, but it was not on behalf of the long side of the market. The market did see support briefly in the early going and volume was running higher giving a hint a short-term bottom may be near. It was not to be as the Fed’s Beige Book did not please the market and sellers took control. VIX remained tame as the index continues to indicate complacent sellers. Without a good dose of fear, this market will not find a tradable short-term bottom. We remain in a very weak market and there aren’t any signs this will discontinue; cash remains king!
Cash is king! Leaders continue to look terrible and even with a few that are holding up they are the exception and not the rule. We want to manage to the rule and not the exception as the RULE will give us the greatest probability of profiting from the market. At this juncture a correction of 20% or more is a great possibility over the course of the next 3-9 months. There will be short-term rallies, but they will spurter out quickly. If you are going to go long during these rallies you must be quick! Real quick, cutting losses fast as well as taking profits FAST! Do not think you’ll be able to hit homeruns over the next few months, you’ll be disappointed.
Once again financial stocks continue to get pounded in the market. The recent price action is certainly foreshadowing negative events whether it be a greek default or another Eurozone country defaulting on their obligation. It really doesn’t matter, as we know price action is NOT favorable to us at this time. Until we see price action improve there isn’t a reason in the world to look to catch a falling knife.
Tomorrow we’ll get our weekly dose of weekly jobless claims. The number is expected to be around 419,000. It should be interesting to see if we see an uptick in the number, but it won’t matter much to the market. Sure, we’ll see the futures react to the number, but in the scheme of things it won’t matter much. Price and volume action trump all and always cut your losses.
