Just another day on Wall Street as volatility reigns supreme as the European issues continue to be front and center. Evidently the BRICs are now entering the fold as one to help out the troubled banks in European, but it won’t ultimately slow down the freight train of what is ahead. Rumors are dominating the market and wild swings intraday are causing panic selling and buying churning up market participants. Today was another example of why cash is king and day trading should be left to the High Frequency Trading (HFT) robots. Preliminary volume shows volume coming in lower across the board reiterating institutions continue to sit on the sidelines. Price without volume is not a recipe for success.
Many stocks are showing wild and loose price patterns with a lack of accumulation. Price and volume are key ingredients determining the future for a stock. Stocks really need a few items to push higher: stock market in rally mode, institutional support, and fundamental growth. These factors have shown up in the best performing stocks of all time. Dinking and dunking to grab a few points here and there is not how to invest in the stock market. The greatest traders of all time know holding onto proven winners in the right market is the key to success. Stick on the path of success by cutting your losses and letting your winners run.
The market can certainly run higher from here. How long? It is anyone’s best guest. However, the upside is more than likely very limited at this point. A run back to the 50 day moving average is more than probable and we are expecting the NASDAQ to run up into it. However, a big VOLUME reversal would signal us to move to an extreme defensive posture. Although the bear flag is the most “seen” price pattern in the world it can still be triggered. It would not take much to create a panic in the market taking the market lower. It is time to be defensive and ready to act at any moment.
Cut your losses quickly and remember cash is king!
