A Head-Shaker’s Market

This column was originally published today at 11:09am EST on my Market Commentary thread of the trading forum over at TheStockBandit.com. It’s being republished here as a bonus for TheStockBandit.net readers.

The bulls are putting together another nice rebound this morning with much of yesterday’s downside being erased with today’s buying. This has quickly become the typical day-to-day routine for the market, as it sells off in apparent desperation one day, only to bounce big the following day. We have seen this happen now for 4 straight sessions and at other times this month, which is making active traders dizzy and causing those of us with high cash levels to simply shake our heads at the indecision out there.

While this price action is out of the ordinary and difficult to trade, it is what it is and we have to deal with it. As traders, we cannot control what the market does, but we can always control how we respond to it. In a very tricky environment like what we’re in, the best plan is to either become very short-term with trades, flipping them for quick gains and keeping losses very small, or we get very selective and limit our activity altogether.

I’m sticking with the latter, but am really looking forward to the time when things smooth out a little bit and offer us some better opportunities for swing trades, as that is my preferred timeframe. It will get here eventually, but this market is running high on emotion right now and both bulls and bears have been quick to press their bets only to throw in the towel on the following day.

Stay patient out there, if there’s anything worse than an indecisive and reversal-prone market, it’s overtrading it and losing money! Hang onto that trading capital of yours and once the clouds break up we’ll be in a far better position to grow it. Right now it’s all about capital preservation.

Jeff White
President, The Stock Bandit, Inc.
Swing Trading & Day Trading Service
www.TheStockBandit.com

[tags]Stock Market, Day Trading, Stock Trading, Investing, Swing Trading[/tags]