Wednesday, April 22, 2009


My previous post was executed in full and the 830-850 bounce took shape in it's entirety by yesterday's close. At this point, I am looking for 2 things: 1) the market continues to execute the neutral flag in preparation for a move lower, or 2) the breakaway fills it's gap and heads even higher. Regardless of what takes hold, both scenarios will "box" the market. We are now in a multi-day consolidation. There needs to be more time to consider taking on short positions.

For long positions, however, I warn that you must be very, very selective. The stocks cannot, and must not, correlate too closely with the general market. A good example of this is FEED or SIRI, or stocks that love to move up, regardless of how the market behaves. If you do want to short, you also must be very selective and find stocks that have the highest probability of moving lower, regardless of how the market behaves. Otherwise, incur the wrath of the whipsaw.

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