More Late Day Fireworks

Late day fireworks were on the menu again today. The heavy pressure that we saw late in the morning and for most of the afternoon reversed in the final hour as the indices shot off their worst levels of the session to end the session in mixed territory. Certainly, the fact that both the Dow and the S&P 500 were able to close above support levels is a positive, but this sort of action is just unworkable. It’s hard not to think that, at some point, buyers will simply refuse to step up to the plate when the indices are in the process of breaking to multi-year lows.

As we’ve been saying, however, trying to do too much of anything in such a volatile tape is a recipe for disaster. These violent and sudden moves may be paradise for day-traders, but trying to build decent sized positions with the intent of holding for more than even a few hours is tantamount to gambling. If your timing isn’t just right, then you’ll find yourself getting stopped out repeatedly.

The bottom line here is that only thing we really need to be doing is waiting patiently for the market to show signs of sustained improvement. The chances for a big counter-trend bounce are growing, but given the recent propensity for quick reversals, we’re wondering how much traction one might get. Regardless, the best thing we need to keep in mind is that the primary trend is down, and it’s going to take a lot of work and time before that changes.