Once again the market did what it does best — confuses/hurts the most people possible. I think just about everybody expected Friday’s jobs report to cause a huge reaction one way or the other. It did create some frenetic intraday swings, but at the end of the day it was as if nothing happened. There were some big winners yesterday though. Many of the interest rate sensitive stocks had a great day — homebuilders, mortgage plays (LEND, NCEN, RATE ), the BKX hit another all-time high… But as far as the NASDAQ and S&P 500, they just had failed breakout attempts yesterday. The NASDAQ tried to get over its middle Bollinger Band, 50-day moving average and the top of that trend channel I’ve been pointing out the last few days. It got smacked back under all three. It also notched its third distribution day in the last six trading days. The S&P failed to breakout to a new 52-week high on a closing basis.
Given the muck the major indices are stuck in, I’m surprised to be finding a lot of attractive looking longs. There are a lot of good looking biotechs, financials, and retailers out there. And those damn daytraders are creating some great opportunities, long and short, in the looney small caps (MAMA, DWCH, VAPH, IDSA, ESMC, TORM…) they keep gunning.
I love the way we’re back in “your errors are obvious only in retrospect” mode.
grrr…
You’ve probably said this before but as the saying goes, “plan your trades, trade your plan.”
What worked for me when I was paper-trading was to wait for major VIX spikes and jump in then. They happen every month or so, which fit my horizon fine.
This time I was all crazy about getting in the first time the QQQs went below their 50-day MA, but I ignored my trusty ol’ VIX signal, which was sending “top” signals despite the QQQs being off by more than 10 percent from the February peak. (Part of this is a function of the cubes & the VIX not tracking the same index, of course).
Now the Vix *is* spiking, hinting that this sell-off is just about done. I’m just hoping the rally gets me back into the green.
oh no, not the dreaded ‘hope’ word! William O’Neil says that people hope when they should have fear, and are fearful when they should be hopeful. You DO have a point where you admit that you were wrong and cut your losses, right?
Anyway, I’m assuming that we just keep trading in that channel until proven otherwise. If that proves to be true we may not get back to the 50 dma for quite a while.
My plan is to sit this one out at least till we gets back to the top of the channel again. If I’m still in the red when the cubes are overbought, then I’ll admit my plan was wrong and start selling with an eye toward limiting losses.