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Psychopathic Market Still Sucks

It’s been a while since my last post, but I thought the market action of the past 6-8 weeks has warranted some analysis to make some sense out of what has been going on with the market lately.

After nearly an 18% fall in the $SPY since mid-summer, a week from hell with +/- 5% rallies and selloffs in the $ES_F and subsequent basing action, the action depicted in the charts can be interpreted dozens of ways.

As the $SPY has been rising since the capitulation night of August 8th, traders have been debating whether the chart is showing a bear flag, bearish wedge, rising channel, and I’ve even someone tweet out a pattern that looked like a rising rooster posted by @FractalTrades.

Regardless of the interpretation, one thing is clear. $QQQ is leading the market up, $XLF is leading the market down, and somewhere in-between, $ES_F (or $SPY if that’s your poison) is somewhere in the middle, near the top of the channel/flag that’s been building.

I’ve been nimble, getting in and out on both the long & short side, playing the action in $ES_F either through 2-4 contract sizes per trade or using $TNA / $TNX as a proxy to the overall market action as correlations approach 1.

The problem with being so nimble lately, has been that while it’s true I’ve been avoiding the “sell low / buy high” market @StockSage1 talked about, I’m beginning to feel that I’m still missing the large moves and larger trends that are within the channel. Perhaps I’m even missing the possible breakout of the channel, and perhaps I’m even being left behind and the train for the next leg of the biggest bull market in history has already started taking off. I really don’t want to be like one of the under-performing money managers who is chasing returns by taking out every possible offer. For one, I don’t have the capital or the power to do that. Neither do I want to use leverage to make up for “lost returns”.

Don’t throw out your own personal consistent trading rules because your current trades haven’t provided the most bang for your buck. Don’t chase. Reflect and act.

So what does a small-time trader like me do? The only thing I can do. Look at some charts, analyze the price action that’s going on under the surface, and come up with my own conclusion.

Let the chart-fest begin. ** Conclusion is below the Slideshow **

  1. Basic Materials Still Suck $X $AKS http://t.co/NhtYrV1o http://t.co/NLiRG8JA
  2. Transports still suck. $DJT $CSX $UNP http://t.co/4aaLbe7O http://t.co/Xxzj9XOe http://t.co/I2QBaOKk
  3. IPOs still suck $P $LNKD $DNKN http://t.co/VZPN5OKY http://t.co/PrhGeuvc http://t.co/eQSB95Ws
  4. Consumer Non-Cyclical Still Sucks $OC http://t.co/geOeqmCv
  5. Oil Servicing still sucks. $OIH $HAL http://t.co/nNYRfnSQ http://t.co/nBpaw4jj
  6. Autos still suck $F $GM http://t.co/t2LU6Xvb http://t.co/HIG0T7rr
  7. Chemicals still suck. $DD $DOW http://t.co/yQt2pA1D http://t.co/1nRDhcqD
  8. Financials still suck. $C $XLF http://t.co/263AztDi http://t.co/UOWHpmPJ
  9. Aluminum still sucks. $AA http://t.co/td68RKlR
  10. $INTC might be getting ahead of itself, well outside upper bollinger band. http://t.co/TuIu3lAd
  11. Copper still sucks. $HG_F $JJC $FCX http://t.co/zS6gcX0n http://t.co/KQeQfIcD

This slideshow requires JavaScript.

Conclusion: The Market Still Sucks

I’m happy to miss the “exact” bottom in the market if I can continue to stay nimble and avoid overnight heart attacks. I believe the $QQQ is basically holding up the market and trying to lead higher, but many other sectors are either lagging, barely getting off the mat, or in the case of $XLF leading the market lower.

I’m personally waiting for the right time to step on the gas to the short side, and am happy to continue getting in and out of this psychopathic market until the true trend decides to show its true colors. Either break out of this channel up or work on the next leg down.

Take care.

Categories: stocks
  1. September 18, 2011 at 5:47 pm

    Excellent read, couldn’t agree more.

  2. September 18, 2011 at 6:35 pm

    Nice assessment of the market and frequent use of the word suck. Seriously thanks for sharing. The wild swings are reeking havoc on traders and investors alike, and this post gives a good assessment of the sentiments and trade offs. Thanks.

  3. September 19, 2011 at 1:19 am

    Very good overall looks.

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