Yesterday’s market action should give you some serious pause as the viability of the current uptrend. Volume rose across the board and yet buyers were unable to keep stocks at their highs of the session. The end-of-day action was weak and indicative of the health we see in the stock market today. We’d love to have a rosier outlook, but at the current time extreme caution must be exercised. It will take a bit more time for this market to resolve itself and setup for another solid run to the upside.
Sentiment never got too bearish and we never saw the market capitulate. In February, we did see sentiment get negative and a bit of capitulation. The VIX exploded and exploded fast. This time around we saw a more moot response to the selling. Market participants have been conditioned enough the market will always bounce back. Over the course of history it typically does bounce back, but it will depend on what time frame you use. In the short-term, we are in a precarious position and it is not the time to be a hero in this market.
Continue to exercise extreme caution. For the more seasoned end-of-day trader it may be best to sit aside and wait for a more opportune time to enter the market. There is no need to jump and take ever trade. The most seasoned hunter knows this all too well. You must wait for the proper opportunity to present itself and at this time we do not have the stars aligned to get long this market.
Have a great Wednesday!
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