The news story of the day was the Italian debt and soaring yields. Volume jumped in a big way on the NASDAQ finishing the day above average. Over at the NYSE volume jumped on the day, but ended below average. Hefty losses were broad based and lead by the banks; who were up until today were looking like they were rebounding. Today’s session was troubling as both the NASDAQ and S&P 500 were rejected at the 200 day moving average a big red flag. At the end of the day the market notched a major day of distribution and left the market with a black eye.
Sentiment figures will be interesting after this week, last week we saw the number of bulls hang near 40% and bears below 30%. At the October lows sentiment was extremely NEGATIVE and part of why we have had a rally as of late. It would certainly explain why volume has been and continues to be light on days where we have positive price movement. Tomorrow we’ll get the new view of weekly sentiment figures out from AAII and it will be interesting to see where sentiment lies after the recent events.
Where do you go from here is an important question. Often times traders go in with a great plan on how and what they are going to buy. What is missing for the majority is where to sell. If you are clueless, it is best to move to cash and reassess. This market is unforgiving and if you do not know what you are doing or doubting your decisions, get out of the market. It is like a horror movie with the hot blonde staying in the house rather than getting the heck out of there. Same goes with the market, have a plan and execute it. If you are caught like a deer in headlights it is best to step aside! Protect your capital and cut your losses!
