Not an Easy Selloff to Maneuver

While I am happy to be directionally correct on this selloff, I will admit this is one of those times that talking about the trade/direction of the market has been much easier then executing trades on it would have been.  While we are once again at lows of the move (lows which I DO NOT expect to hold), the constant late day rallies have caused havoc, and made any tight stop loss strategies difficult to work with.  Yesterday’s rally – during the majority of the day, AFTER a gap down, was an example – as it made no sense.  So while on the surface this has been finally been a victory for bears, it has been like riding a bucking bronco …. especially when the rallies have come for no apparent reason and on little volume.

Again, as I said a week or two ago, if we broke the 50 day moving average support the problem for bulls is there is no real secondary support for a long while.  That is a condition of a market that effectively (aside from a 3 week break in November) went straight up for 6 months…. along with a short base that threw in the towel a few months ago.  The 200 day moving average is the next big time support level – if we get there, I’d be interested in going long for a trade.

Ironically the retail investor had just come back into the market per the inflow data about 6-7 weeks ago… just in time to be greeted with a slap to the face.

About Mark Hanna 542 Articles

Affiliation: Hanna Capital, LLC

Mark Hanna is President and Owner of Hanna Capital, LLC, a registered investment advisory firm. Mark has been a follower of markets since the late 80s, with a focus on individual equities since the mid 90s. He has been a well known commentator in the financial blogosphere for the past 5 years, following a career in corpoporate finance and accounting. Mark attended the University of Michigan where he graduated with a degree in Economics.

As an avid reader, Market Montage is the personal blogging site for Mark to share his views on economics, markets, and the like. Occasional cynicism and wit shall be deployed in his postings.

Follow Mark on Twitter @fundmyfund.

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