Wednesday, October 29, 2008

Was Hoping To Finish In The Black Today..........

Although investors stepped up to buy the big dip following the sell-the-news reaction to the Fed’s announcement that they had cut their target for the fed funds rate by 50 basis points, sending the major indices higher by more than 3% late in the day, a massive wave of selling hit just before the close. In a matter of minutes, both the Dow and the S&P 500 fell by about 4%, into negative territory, while the Nasdaq was just barely able to stay in the green. Of course, we’ve been talking a lot lately about the need for this volatility, and whatever the reason for the late rush for the exits (many are pinning it on comments from GE’s CEO Jeff Immelt), we certainly didn’t get it today.

Yes, the ability of the market to find support around the intraday lows from the 10th leaves us in a position where the charts for the major indices can continue to build bases, but the speed with which this market is moving in both directions is going to have to slow down a bit. Trying to employ any reasonable money management technique at this point is almost a joke, and if you aren’t trading on an hour-by-hour basis, it’s best to just stand aside.

The bottom line, then, is that we can trade with extremely short time-frames, but we’re going to have to be patient if we want to start building position trades. We’ll get there, but as frustrating as it is, there’s no use trying to force that along.

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