Dow Closes Under 11900

The Dow closed at 11893 and all indices closed below their January lows.  It was definitely a “ride the waves” day of trading, but the selling outweighed the buying.  I didn’t even see a substantial amount of short covering at the close.  We have a lot to look at this evening, and we need to analyze all of the Fed moves today.  Check back later tonight and over the weekend for a more complete analysis of the market, economy, and our trades.  I hope all of our readers had a great day!

Stock Market Summary - February 26th 2008

In 1959 a television show began airing in the United States called the Twilight Zone, this very popular and highly acclaimed series was a combination of science fiction, fantasy, and horror all wrapped up in one 30 minute story, which most always concluded with an unexpected twist. Today whenever we think of something very strange we think of the Twilight Zone…

There is a fifth dimension beyond that which is known to man.
It is a dimension as vast as space and timeless as infinity.
It is the middle ground between light and shadow,
between science and superstition,
and it lies between the pit of man’s fears and the summit of his knowledge.
This is the dimension of imagination.
It is an area which we call . . . the Twilight Zone

I brought up the Twilight Zone analogy because with each passing day the markets and the economy just seem to be getting more and more surreal. Economic data received today continues to point to a worsening outlook and today the market took that as a sign that more rate cuts will be coming. The economic conditions are deteriorating so quickly and with inflation rising again the US Dollar today set another new low today. Many Wall Street professionals who were paraded on CNBC a month or two ago stated that they felt the bottom was in on the US Dollar. We never made any claims like that because we don’t call bottoms on speculation or conjecture. We work only with facts and the facts showed us that the dollar could still go lower. And lower it has gone. And with today’s gloomy economic data the markets are now pricing in yet another rate cut. With inflation growing substantially over the past few months, the US Dollar continuing to fall, and commodity prices still rising another rate cut will only exasperate this alreay volatile combination.

But today’s advances in the market stopped right at a significant resistance point. As we said previously, our short position on the Dow Jones Industrials would be covered at break even if the market advanced upwards towards the next resistance level. And that we would short at the next resistance level, and that is what we did. We are maintaining our short position on the market. In technical analysis you have to set emotions aside and use the charts as your guide, never mix emotions and investing/trading together… for that is a bad mix.

The chart below is that of the Dow as of today, observe that we are now at a significant resistance level and from the technical perspective this offers us another opportunity to take an entry on the market in a short position. We are at a point where the markets are likely going to become more volatile very soon, and typically when volatility goes up the markets go down.

(Dow Jones Industrials - Daily chart)

And speaking of volatility, applying technical analysis to the $VIX works just as well as with any stock. In this chart of the volatility (VIX) index I have identified the ascending triangle pattern and superimposed the S&P 500 on top. The volatility index is the blue line (observe the ascending triangle pattern highlighted with the blue trend lines). The S&P 500 is shown as the red line. Each time the volatility rises the markets decline, and currently we are very near a point in the volatility where we can expect to see a rise as it bounces off the trend line. Ascending triangles usually resolve to the upside, so this would tell us that we are likely to see much higher volatility in the future.

(Volatility VIX Index with S&P 500 - Daily chart)

On the economic front we received the Producer Price Index (PPI) data today. This measure of inflation had a top line gain of 1% over last month and a 1% jump is significant. The core PPI rose by 0.4%. Those who say the core is more important than the top line numbers live in an artificial world. Core data is what is left when you strip out food and energy. In the real world people live by food and energy, so those who slam their fist on the table and say "the core is more important" are somewhere in the Twilight Zone.

Inflation is continuing to grow, yet the markets are screaming for more rate cuts. More rate cuts will only add more fertilizer and water to the growing inflation seeds. Cutting the interest rates may help in the short term to un freeze the credit markets, but at what cost to the American people? The old saying is true "They are dammed if they do and dammed if they don’t" (with respect the the Federal Reserve). There is no easy fix to any of these problems, cutting rates only creates an illusion of a functioning market but underneath the fires are being stoked and will result in a pressure cooker explosion.

(PPI data - 10 year chart. Data source: Moody’s Economy.com)

Home prices continued to decline as measured by the very accurate S&P/Case-Shiller Index. We are now at a point where the year over year declines are the largest ever since the index began in 1988. The summary report issued stated that there are no signs of stabilization in the data. The renewed hopes of more rate cuts by the Federal Reserve coupled with the irrational buying on the announcement by IBM that they are going to buy  back $15 Billion dollars of their stock is what is responsible for most of our advance today. Recall that Lisa wrote about the significance of companies buying back shares of their stock. Companies that buy back their shares are essentially "hunkering down". It is used to artificially inflate their EPS by reducing float. The amount of stock buy back announcements has been very high during the past 6 months. And in the course of history we usually see large stock buy backs in times of economic turmoil and bear markets. We will begin our own index of tracking stock buy backs by companies on the S&P 500 and use this index in the future as one more measure of corporate sentiment of the economy.

How about this news item… The Federal Deposit Insurance Corporation (FDIC) is hiring people to get ready for bank failures. As reported by the Wall Street Journal:

(US) WSJ reports that the FDIC may be preparing for a rise in bank failures

- The FDIC is looking to rehire 25 retirees from its division of resolutions and receiverships.
- Many of these agency veterans worked for the FDIC during the late 1980s and early 1990s, when more than 1,000 financial institutions failed due to the savings and loan crisis.

For now, as we wait for the next bit of economic data, or the next announcement of losses by a bank, or as the FDIC is now hiring back employees to get ready for the onslaught of bank failures we can only wait and see, and use the charts for our guide. But one has to admit that the events over the past year could have been something right out of a Twilight Zone episode.

You unlock this door with the key of imagination.
Beyond it is another dimension- a dimension of sound, a dimension of sight, a dimension of mind.
You’re moving into a land of both shadow and substance, of things and ideas.
You’ve just crossed over into . . . the Twilight Zone

Market Close

The afternoon bounce was as lame as they get.  Selling was the word for the day.  This market continues to saw off it’s legs one by one.  Dow closed at 12959, Naz Comp at 2593, S&P at  1433.  The transports fell 2.3%, a 52-week low.  The only sector that was green was Utilities! Should also note that, according to a newsletter, a company by the name of Cooper Arch, a $1 Billion hedge fund, is going to liquidate. 

After hours:

 Hewlitt-Packard reports Q1 $0.80, ex items vs $0.77 Reuters consensus; sees revenues  of $27.4-27.5 bln vs $27.04 bln Reuters consensus.

Capital One (COF) and NetSpend agree to terminate acquisition agreement.

AT&T and EchoStar apparently do not have any agreements in the works, in spite of the rumor to the contrary.  That rumor pushed up the price of Echo (DISH).

 Nordstrom’s (JWN) preliminary: $0.59 vs $0.52 Reuters consensus with revenues $1.97 bln vs $1.96 bln Reuters consensus.  They see FY08 $2.88-2.92 vs $2.76 Reuters consensus.  Well, they can dream can’t they?  I admire their ambitious nature.

There will be more in the wrap-up tonight. 

The Day that Was - October 25th 2007

Guess who reports earnings tomorrow? I’ll give you a clue. The CEO has a good tan, he is currently being investigated for selling his company stock before the bottom fell out, and they are partly responsible for the mess our markets are in. Give up? Country Wide Financial (CFC). Yep, the mortgage lender who has more sub prime than a bad meat packing company who sells sub prime cuts of meat.. Ok, bad joke!

CFC reports tomorrow on what could be a significant market moving event. What they have to say about the health of their company, the health of the mortgage industry as a whole, and if they are still losing money or not will all be looked at very closely. Any doom and gloom from the CEO and we can expect to see the financial sectors take it on the chin yet again.

The trading in the market today was all over the place. Another text book example of ‘indecision’. Using candlestick charting techniques the pattern printed today was a ’long legged doji’. “This candlestick has long upper and lower shadows with the Doji in the middle of the day’s trading range, clearly reflecting the indecision of traders.”There is so much uncertainty in the markets that it is becoming nearly impossible to gauge where we are going to go. Traders are fearful of the news that is coming out on the economy and how this will impact longer term stock prices, while other traders are trying to push the markets up in the hope that things will resolve somehow.

Next week we get the FOMC announcement on what they will do. Today the Fed Funds Futures have gone back up again and are pointing to another rate cut on Halloween. Will it be a “trick or treat” to the markets? Another big rate cut could signal that the economy is really heading in the crapper and this will have longer term stock prices in jeopardy, so traders will take money out while they can. If the rate cut is not as big as the market wants then we could also fall hard. Keep in mind that a rate cut could rally the markets in the near term and this brings in an interesting situation. With the FOMC meeting coming at the end of the month we could see a situation unfold before us that involves institutional money wanting to close the books on some of their positions, and thus will take advantage of any rally to cash out and bring the rally to an abrupt halt. The end of the month is usually when institutional money (mutual funds) make some of their biggest transactions. So the FOMC announcement will take place on a very unique day. With so much uncertainty in the markets, with the prospects of recession all around, and those looking many months down the road, they could take advantage of a market rally to get the best price they can for their sales. The more institutional money that leaves the markets the more downward resistance weakens.

Oil is back above $90 again, this time on tough talk from the US Government on Iran. This sent oil and Gold back up again today. Now, in addition to oil getting above $90, the new Iran tough talk has the gas prices inching up again. Today gas prices rose almost 10 cents a gallon on the trading floor. So expect to see your local gas station begin to change their signs soon! And it won’t be like Wal-Mart doing a roll back, they will be putting up bigger numbers on the signs.

I have charts for the Nasdaq and the DOW tonight.

The Day that Was-October 24, 2007

The existing home sales numbers showed more houses waiting to be sold and prices going lower.  Merrill Lynch is having some major problems with the “sub-prime” issue.  They are writing down billions, and during the conference call they were not willing to discuss how much worse it could get.  This caused the stock to drop even further.  There is no clear picture on how bad these losses will be for any financial institution.  This problem is far from being “contained”.  Not a great start to the day.

The Dow had another up/down time today that can give one whiplash!  13400-13500 is the area to watch on the Dow, not wanting to see it below.  The S&P closed over 1500, but under the weekly trendline. 1490 is a critical support short term.  The yen is holding it’s strength, adding to worries of carry trade unwinding.  The Nasdaq composite is trading in a rising wedge on the daily (Chuck will put charts up tomorrow, he may disagree, but I see the wedge).  The semiconductor sector (what I deem “tech”) is sickly.  The SMH and $SOX lost a good bit of ground today.  The QQQQ seems to have a mind of it’s own, but weakness in the Nasdaq 100 may finally have an effect on it’s upward trajectory. The financials, homebuilders and retail sectors are still down.  And the flight to safety in bonds continues.

 The volume today was higher than normal, decliners outpacing advancers, more new lows than highs.  The pattern continues with higher volume on the down days.  The rally at the end of the day was interesting.  Apparently, there was talk of the Fed’s instituting an emergency rate cut of 50 basis points.  Why an emergency cut would be necessary before the meeting next week is beyond me.  Confirmation did not come and the market pulled back a bit from it’s upward frenzy.  What this shows, however, is the extreme emotions at work here.  It could be a preview of what will happen when the Fed’s do cut rates next week.  Of course, I have no idea if they will cut or by how much.  But, if I were a betting woman, I’d say they are cutting rates.  This volatility will be at work in the market for some time.  Don’t forget that the popular momentum stocks can go down even more quickly than they go up, so understand you are playing against big funds when it comes to these stocks.

 The primary trend of the market is still upward.  That doesn’t mean that the short-term trend is up, or even the intermediate term trend!  That’s why we are watching more than just the major indices to tell us the health of any move in the market.  Then we make our trading plan.  That keeps us from jumping into or out of stocks based on an emotion-driven, rumor-laden move. 

These wild swings in the market can drive a trader crazy.  It will bring out emotions you don’t want others to see in public, especially if your stock is dropping.  Even if your stock is rapidly going up, your heart races, your palms get sweaty, you get knots in your stomach.  It’s a bit like meeting a blind date.  Your friend said he has a great personality and he sounds intelligent on the phone. You’re nervous about seeing him for the first time. Then, you meet and he’s incredibly handsome to boot, and now you’re really nervous! (Anyone who’s ever been in this situation knows what I’m talking about).  But, the thing that keeps you from stuttering, sputtering, and acting silly, is if you have a plan for the date.  Dinner, movie, drinks, and dancing.  It’s the same with trading.  To keep us from acting silly we have a plan with entry/exit, support/resistance, broad market outlook. We have to keep things in perspective.

See you in the morning!

The Day that Was - October 22nd 2007

We had a technical bounce right where we identified major support would be on the S&P 500. From a technical stand point, today could have been a text book page on what a technical bounce is. The S&P 500 low of the day was 1490.40. Does this mean everything is all OK now? No, unfortunately not. A technical bounce is just that, it is not on fundamentals changing, just oversold conditions and short covering. We are likely to see a continued upward advance,albeit on light volume until the next downward leg sets in.

On the DOW, the closing price was right under the 50 day moving average on the daily chart. That is not a strong resistance point, but it did provide resistance during the trading today and will likely be easily overcome in the next few sessions. But we still have a general market that is ‘trendless’. A market that is unsure of what direction to go makes swing trading very tough. Because within a trend-less market the various sectors are also all over the map. In a healthy bull market when a sector makes an advance out of consolidation it is, more often than not, a buy signal for equities within that sector. The problem we are facing is that sectors are making wild swings, what is a buy signal one day becomes a sell signal only a few days later. And it is not just the big cap stocks and sectors. This is occurring on every major index (Russel 2K, Wilshire 500, small caps, mid caps, etc). During a normal market, swing trading is our primary money maker. And while no trade is ever ‘easy’ (meaning that all trades require work to manage them properly) it is difficult in a trend-less market to grab something that will offer the best reward profile. Last night we presented some stocks in a sector that recently displayed signs of further weakness, and within that sector we chose some stocks that are prone to succumb to that weakness. Today the retail sector was up on the technical bounce, but we still see continued weakness for that sector. So while we may present you wi th trade ideas it will not automatically mean they will trigger the next day, they have to be watched for the conditions to present themselves and then we jump on board.

But I will tell you this, our markets currently are as fragile as the lead-up to the tech bubble burst in 2001. We have not seen this much uncertainty in the markets in a very long time. This uncertainty in the trading can be seen in the tape, it is almost frightening to see some of the things crossing the tape. Until the market makes a decisive move one direction or the other we are going to remain in this state of trend-less back and for th ranging action. A swing traders nightmare. We are still working on the new web site with live interaction capability so that we can present daytrading ideas for those who day trade.  A blog is not the forum on which to present day trades. I’m am very confident you will like the full site when it is introduced. The more I work on it the more excited I am to introduce it.

Tonight, Apple released earnings and they were good, a surprise upside. A bit over the top in our opinion on their forward guidance.  Based on previous revenue growth reported by Apple, we can’t see how they will be able to manage that much of an increase with the retail sector showing a reduction in spending. Expensive toys (iPods, iMacs, and such) take a back seat to food, gas, clothes, and other living expenses. All of which are costing more and will likely go up even more this winter.

After hours tonight, Target (TGT), a bell weather for retail spending, issued a warning on their sales. They have reduced their same-store sales estimates by a substantial margin. They cut their sales growth in half. What was going to be a 3-5% growth has been cut down to 2-4%. This is no small event, this is one more knife in the retail sector back. This is what we mean by having 20/20 vision.  One has to keep the headlights on to see what lies ahead down the road. But, regardless of what is likely to happen and what is happening currently, many traders don’t associate them. They wait for danger to fall in their lap before they worry about it, and even once danger has fallen in their lap and they get burned, they forget about it very quickly and are prone to make another dangerous choice again later. We think Apple is a wonderful company.  Do we think the price is over extended, you bet we do. Going back to the slot machine metaphor I used last night… this machine is going to run dry and stop hitting soon, and someone is going to be left holding a large empty bag, for all the quarters will have been taken by someone else.

Texas Instruments released earnings today and they were not so great. The tech sector will likely be impacted by this. The extent and duration remains to be seen. After hours Thornburg Mortgage (TMA) announced that their chief lending officer was going to retire (that is a nice way of saying he was fired). I guess things are still not going so well at Thornburg

 Events on the calendar for the rest of this week:

Economic:

Wednesday, October 24th- 10am: Existing Home Sales; 10:30am: Crude Inventories

Thursday, October 25th- 8:30am: Durable Orders, Initial Claims; 10am: New Home Sales

Friday, October 26th: 10am: Michigan Sentiment

Speakers:

Tuesday- 8:30am:U.S. Treasury’s Paulson speaks about China-U.S. relations

Wednesday-U.S. Treasury’s Paulson speeks on India’s economy

Thursday- 9am: Fed’s Consumer Advisory Council to discuss mortgage rules

Friday- 4:15pm:Fed Governor Mishkin speeks on financial instability

The Day that Was - August 10th 2007

A quick summary tonight as the full market wrap will be in the Sunday Newsletter.

Charts of the indices are still very weak and any more bad news will send them down another flight of stairs. The DOW actually has formed a bear flag and that in itself signals further decline is likely.

The S&P 500 managed to close above 1440 which was important. But it closed under the 200 period moving average so this index is still showing weakness.

Check in Sunday night for the weekly Newsletter.

Good night Rebels…

The Day that Was - August 2nd 2007

Good Evening Rebels…

Before I get started I have breaking news that just came over the wire. American Home Mortgage (AHM) has announced that effective tomorrow, Friday August 3rd 2007, they will lay off most of their employees. They are reducing their workforce from 7,000 down to 750! The CEO says they are doing this to preserve the value of what assets they have left. They also announced that they are no longer taking any mortgage applications. It is not looking good for American Home Mortgage, and I feel this is just the beginning of the financial sector problems. In his statement the CEO said the following:

“the market conditions in both the secondary mortgage market as well as the
national real estate market have deteriorated to the point that we have no
realistic alternative”

The market made some advances today but the technical indications are still signalling that another shoe may drop. The advance on the S&P 500 today was on slightly lower volume. On any advance you must have increasing volume in order for it to be registered as strong. With volume being higher on the down days than the up days is showing continued weakness. We may still see another large drop in the indices to levels that may be lower than the drop we had last week.

The wild price swings in the S&P over the past two days is signalling increasing confusion in the market. There is no clear direction and this becomes a dangerous condition to be in. The market can be easily spooked here and if a skeleton pops out of the closet and it is scary enough then we drop hard.

Another sign that there is no confidence in the market is how many advances in individual stocks keep getting sold off. No body is comfortable leaving money in the market yet.

The news tonight about American Home Mortgage will probably be felt in the financial sector tomorrow. And the chart for the XLF (Financials SPDR) is showing a continued weak sector. I project that the XLF will eventually drop to the 200 period moving average.

I received an email from one of my subscribers asking why I am not swing trading more during this period where everything looks to be “cheap”. The answer comes down to one word “RISK”. It is all about risk management and protecting ones capital. Trying to trade inside of the volatile swings can take your money away very quickly. We are in a state here where the market has no direction. Within a day we go from negative to positive, and back and forth over and over. You watch a stock start to go up and by the end of the day is has lost all of its gains and then some. Don’t try to trade in this volatility. If you want to keep your money then you have to exercise restraint and wait out the storm. Trying to swing trade in this current environment is like driving a car on ice, down hill, with bald tires, and no breaks! Leave the keys on the kitchen table and when the storms clear and we can see clearly then we can establish our trades in the direction the market is taking.

The new RebelTrader watch list and commentary printouts will be completed this weekend. I know you will like it. You will be able to print out the watch list and keep it with you. You will know what I am looking for on each trade to become valid and you will know when you should get out if the market turns sour. There will be some other things in there too that I will let you see when I release the first issue this weekend. I strive to make you all great traders!

Tomorrow we have unemployment data and that will be very closely watched. If there is a negative tilt to the data then we will have a sell off tomorrow. Tomorrow also being Friday will add to the anxiety of the market. Whenever the market volatility is high like we have now there is more likely to be a “take some money home for the weekend”.

S&P 500

DOW

XLF (Financial SPDR)

The Day that Was - August 1st 2007

Before I get started I want to ask everyone to keep in your thoughts the people involved in the terrible disaster in Minneapolis. And I know for my firefighter Brothers in that area there are some many long days and nights ahead of terrible and heart wrenching work to do. My heart and thoughts are with all involved.

Today was looking like we were going to end with another down day. Towards the end of the day the market sold off all the way until the S&P hit the support point. And as if it was right out of a text book the market bounced right at the support. What has taken place today is that once the S&P hit the support level some buyers stepped in as that is the most likely point where there would be the bounce. Once enough buying started those that were short in the market started covering at the same time. Those holding shorts also know that the support line would be the likely bounce point. So they watched for a few minutes when the buyers started coming in. When the buying was looking strong off of the bounce the shorts started covering in greater numbers. And the two together created the big run up at the end of the day.

So the end of the day rally was two things. The first was bargain buyers taking advantage of a likely bounce point, and the second is shorts covering. In extreme market volatility like we have been experiencing there are vast amounts of stocks being sold, shorted, covered, bought, shorted again, and so on.. that adds to the wild swings we see.

At the end of the day the S&P managed to just squeeze above resistance and close above the line, albeit just barely. So does this end of day rally provide some confidence to bring other buyers to the markets? Right now the market is being moved by the pros. The retail money (you and me) is not enough to have a significant affect on the broad markets during this volatile stage. What we are witnessing mostly here over the past few days is large amounts of money being moved into and out of various stocks and sectors by hedge funds and institutional money.

When the market is in this type of extreme volatility with big ups and downs the markets will be “tested” at each resistance and support levels. It is the reaction of what happens when these key levels are approached that determines if we move up or down. It is like what happens when you put your hand under the water to see if it is too hot or too cold before you get in the shower. If the market gets near a resistance point and it is too hot it pulls back. So now we have another level of resistance above to overcome. Remember my analogy the other night when I described support and resistance is like the floor and ceiling of a building. And that the market fell from the 4th floor down to the 1st floor. Today we climbed back up to the 2nd floor. Still have a ways to go.

The financial sector is still an anchor on the markets holding it down. Housing is just as bad and there is no bottom in sight yet.

Before I post some of the charts tonight I was to say that the new watch list that I am working on and which you will be able to download I am looking forward to everyone seeing. I feel everyone will like it when I make the first issue available for download. It will be a PDF file that you will be able to download and print. In it will be charts, buy points, a description of what it is that I like about the setup, the sector the stock is in, the short interest, and the next earnings release date. There will also be a weekly wrap up that can be printed and a full Microsoft Excel spreadsheet of all my trades showing date, price paid, price sold, gains, loss, etc. I hope all will like it!

Now some charts from today..

The S&P

The Nasdaq

The DOW

The Day that Was - July 30th 2007

Good evening Rebels..

There was nothing surprising about the up day in the markets today. I mentioned in my market analysis from Friday that so many indices were sitting at support that is was expected there would be some kind of bounce. The issue that still remains is how will this and any more advances hold up.

The DOW ended the day up 92. That gain was really from only four companies. Of the 30 companies that make up the DOW index Boeing, Alcoa, American Express, and General Motors made up most of the gains on the DOW today. The remaining 26 companies were flat, down, or only up slightly. The advance today was weak and the reason I say that is because I am looking at the ADX indicator. Notice on the chart shown here the +DI (buying pressure) was only flat at best today. A healthy upward advance will be reflected by good buying pressure and today the buying pressure was almost non existent. The saving grace today was that the selling pressure (DI-) tapered off somewhat. Kind of makes me think the big sellers are sitting in the bushes waiting to strike again.

Ok.. now that we had an advance on the DOW where is our overhead resistance? Using the trusted Fibonacci numbers we will encounter resistance at 13560. We also have some minor resistance at a slightly lower level at 13480. Also note that we are still under the 50 day moving average and once under that important moving average that then becomes resistance as well.

The S&P 500 did a little better today but major resistance is still overhead.

Another chart to show is a sector analysis of the precious metals. See the chart here. Notice that it closed very close to the 50 day moving average (moving averages provide support during pullbacks). This sector needs to now advance from here otherwise it will drop down to the 200 day average. A drop in this sector will have a negative impact on the S&P.

So now where are we here in all this. We had a bounce today and it was no surprise. Actually if there was no bounce today that would have been a surprise (and scary). As with all bounces following a huge sell off the next few days and weeks will determine where the markets are going. There are still swing trades out there to be had but the risk is high because the market can drop again and take our swing trades along with it. Recall the trade idea I provided on Friday morning, Abb Ltd (ABB) today did exactly what I predicted it would do. It was a perfect bounce from strong support and in a company that has little exposure to the US economic problems. Today ABB gained 6% in one day. A good swing trade that worked as expected but one sneeze in the broader markets and this could fall back down. So while there are some good trades out there we have to trade them with even more caution. Protection of your capital is the most important part of trading in the markets, making money comes next.

A couple of stocks I like here:

Varian Semiconductor Equipment Associates (VSEA)

Intel (INTC)

Please remember my fellow Rebels… all swing trades while the market is in this very volatile condition are risky. Added risk can create added gains if the market goes up but think of it this way. Swing trading while the market is volatile is like trying to ride a roller coaster without a seat belt. It is tough to stay in the seat and if the car goes around the loop you could fall out and come crashing down. Hold on tight if you take a swing trade. As I said this morning I would not be taking any trades today. I need more signs of where this is going. will I make any trades tomorrow? I’ll know after I see the earnings reports that are released pre market and the economic data tomorrow (lots of economic date to be released tomorrow - personal income & spending, Core PCE and the PMI).

Never be too anxious to make a trade. There are good times to trade and bad times to trade. Right now is not the best of times.

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