5/7/2011 stock market review

crazy action all week. what a way to start may!. end of april we reallied to highs but many of in the room were talking about how we werent goosing the returns out of the market you would think when market is at breakout. lot of stocks were lagging. i shold have seen that as a sign that there was trouble to come. (divergence).

we talked now for a month how commodities were a crowded trade. we saw this week the effects of what happee s when everyone leans the same way. the burst of all this selling put huge amoutn of pressure in the market as over this past 6 months they’ve econpassed so much of the trading in the stocks in the indexes.

right now we dont know if this pullback in those sectors is a gamechanger or not. will take a week or 2 to see what kind of bounce develops and the nature of that bounce.

economic data finally weighing on the market. with end of pomo and the data being so lackluster it is providing incredible headwind on the market.no longer are we beating estimates on this. we are start to see flatlining in the econonic data

earnings are so-so. not see the number of bigtime earnings breakouts that i saw last quarter.
all this is giving the market a noodle dic$ its flimsy and all over teh place. We had a huge potential trend day on friday and got taken down by a rumor spread by a no name newspaper

good market for scalpers and longerterm swingtraders that can survive a weeks wroth of ups and downs

very dicey for the shorterm swingtrader 1-4 day holds as you dont know where market is heading and the action between support and resisatnce is getting wild.

got to play defensive here. especially for smaller accounts. capital preservation is key. if your trading a 5-15k account most likely this type of environment will eat up capital as the intrady swings and gap downs slowly eat ur equity but the commisions start nailing u as there is a tendency to overtrade as its mostly a daytraders market as of this moment.

Use scale in strategy for swings..throw out a starter position let it marinate then add to it when you see a prime opportunity or get stopped out for loss. 4% loss on a 1/2 positions is really only 2% so no big deal.

lot of emails from people getting shaken out of plays. if thats the case and your are getting stopped out to only see ur position reverse then use smaller position and give your stock a little bit more rope so u dont get shaken. OR trade faster and take profits quicker.