Fly's in the Buttermilk, What'll I do?

8:57 PM

We've all heard it before. The trend is your friend. And that still holds true. But when the VIX is telling you volatility is off the charts, and when 3 digit changes in the DOW seem common place (10 of 11 days) the trend is often defined in minutes and hours rather than days.

Perhaps you find yourself in a situation similar to mine. I was an investor. Then I became a Swing Trader, A Momentum Trader and now, I often find myself to be a Day Trader. No, my trade's don't start out with day trading in mind. But they often end that way. Often, having a nice profit at the end of the day and knowing the DOW can swing 200, 300 points in any direction on a whim, I simply take my money off the table and go home! Nanny, Nanny, Boo-Boo! And I mention all this for a reason.

Reason you ask? What could possibly be the reason for all this gibberish? It's simply this......

Don't Fight The Tape!

Yes, this is the “right now, this minute” version of “The Trend is Your Friend”. The daily charts clearly spelled out that this should have been a down day. I do not apologize for Friday's conclusions. But the weekend clamored with very strong innuendo from two very powerful Euro Leaders. And once again, everyone got really excited! REALLY, REALLY EXCITED. Yes, +330 points of excitement!! Did you argue with the tape this morning? Did you fight the upside the pre-market tape was clearly indicating? Or did you recognize what the tape was telling you? It was a “pick anything” and go long kinda day. A day that was hard to miss with any long stock pick.

What? The Headline? Yes, there is a reason for the headline. But do I really need to spell it out for you? I do? OK, there is a fly in the buttermilk. Actually, a couple of fly's!! While the market was churning (the buttermilk of course) a couple of fly's were noticed. Yes, you know what they are! ONE~ VOLUME!! It's not a lot of volume. And what does that tell you? Simply that there weren’t buyers galore clamoring to jump on the bandwagon. Yes, I know it was a holiday of sorts. And yes, the bond market was closed. But Volume just wasn't there to confirm this upside move. SECOND~ We have played this game for weeks. Rumor, Innuendo, Empty Words of Politicians. Later, when it is realized that there is no substance behind the words, the nice elevator operator asks “Going Down”?

The Charts

I will admit that volume and holiday's be damned, today's price movement did some damage to the technical  downside reading. The DOW, SP-500 and the Naz all broke thru the 50 SMA. And the DOW broke thru the Bear Flag Resistance line (which is losing it's authority anyhow). I still think we need to test the bottom before we can have a really good rally. But Yom Kippur is over, Santa is right around the corner, and we could have a year end move to the upside. But I ain't here to give my personal feelings about things.  Rather I'm here to read the charts. So check out the trend tables, look at the chart below and set your sights accordingly.

CURRENT MARKET TRENDS

Long Term (Weekly Chart) – Sideways

Medium Term (3 day chart) – Sideways (Trading Channel)

Short Term (Daily Chart) – Up