Monday’s gains were certainly a positive, but the mixed volume was a clue the gains may not hold. Today’s selling was fierce as volume jumped across the board. Led by the Russell 2000 and NASDAQ the entire market moved lower even as Crude Oil prices pushed higher. Since February crude has risen nearly 100%! MGT continued its tear as the stock traded more than 100 million times. This market is on very shaky ground and we continue to play this market with extreme caution. There is no need to be a hero and all of our exits must be adhered to. No exceptions. Stay nimble and protect your capital.
We are not going to predict where the market is headed next. No one really knows where it is headed. The trend for small caps and the NASDAQ are in a downtrend. Small caps were even outperforming the NASDAQ up until recently. Strength was in the Dow and S&P 500. Now, it appears weakness is now spreading across the board. Protecting your capital should be your number one priority. Cutting losers is the golden rule of trading. Live to fight another day. Trying to win every battle will only lead you to losing the war.
Yesterday was a decent start to the week, but with today’s action it spells trouble for the market. Today’s high will be an important level to overcome. The S&P and Dow will need to retake their 50 day moving averages to reverse today’s move. Let’s see how this market moves, but there are plenty of warning signs.
