This trade was one that I did not participate in, as I was trading the bonds today, but what a two day recovery in the indices. One caution that I would like to comment on is the tendency for the BULLS to get over excited about what they perceive as a market bottom.
Personally, I do not see the high volume that would associate itself with a turnaround and this looks more and more like a bear trap, in my humble opinion. On a longer term basis, I would want to see more volume on the move up to warrant any long positions.
Today and yesterday was beautiful in the bottom and pull off that bottom, and looking at the chart you have higher lows showing that would warrant an entry on the long side over the last two days, as a position trader. With this being said, I would argue not to marry any trade to the long side, and on the first sign of weakness to dump the position and await further PROOF that the market has bottomed.
I am still not convinced that the BEAR move is over ... but on the positive note is that this is an election year, and historically the market has proven to be a good place to be long in the last half of the year. So with that being said, I would approach the buy side with caution.
As in all things, take this with the grain of salt it is worth. Once again, the volume has not commited to the long side at this point in time, so be wary of any longs you are holding. Always remember that a market can fall at least twice as fast as it goes up.
Can we get through the week on a positive note? By looking at today, I would say yes, but keep your eyes on the reports tomorrow and see how the markets react to them, especially the building permits at 8:30AM Eastern Time, also I believe the Natural Gas Storage will be in play tomorrow with the big move down in OIL.
Good Trades,
David AKA Tiger
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