Well, today was horrible for anyone who was long going into the election and was thinking that any certainty would help the market. Well, it may have had been a good theory (in theory) but apparently the market didn't think so. I took off my longs yesterday as I was quite unsure with the direction we would take because of the election. Now that we have fallen over 2% in one day with the amount of volume we have seen I suspect that we will continue lower. I recommend looking at the weekly chart now to tell where the next major support is. The daily is not unreliable and price moves too get to get a solid bid in. As a swing trader I will be very selective on the ones I am choosing, and more than likely I will be short the market on any bounce after today. Below is a longer term chart of the market ($SPY) that takes a look at the other times we have seen such augmented volume. After you see this chart below you may think that I am a bull in the market. That is simply not the case. I am just purely stating a trend. And as a friend of mine pointed out - High Volume can come at the top of a trend (see August 2011) and at the bottom (see August 2011). The financials did not hold up well at all today, this again leads me to believe we see more downside momentum. There is absolutely no way the market leaders fall over 3% and not see some follow through. The banks ($XLF) fell through the 50 SMA today with volume, this is something that has not been done since early August 2012. Techs like Apple, Google, and IBM also continue to show weakness. Apple sold off again today with alot of the power. I suspect we see some more selling too. The shear amount of volume, and the fact that we have traded below the 200 SMA for four days now, this has not been done since 2011. Google sold off some more today falling below the ascending triangle it was trying to form. There is more to come in that one too. As for IBM I think we also see continue downside. There is slight support near us right now in IBM but the heavy support comes in closer to 183. 

To sum it up I would like to say I am not a bull by any means. I believe we are going to fall further (and punish Obama for being re-elected, haha) and go deeper into a correction. By no means am I saying we going into another recession. That is ridiculous to think that. If you, or anyone you talk to says that we are now going back into a recession - don't believe them. Just as one day doesn't make a trend, one day doesn't make it recession. Going forward I would be developing a strong watchlist of strong trending stocks that have not been very affected by this market pullback and be ready to act on them when the time comes. I would also reccomend starting to look at the weekly charts for support. The daily support is not as reliable when we move like we have done today. We need to find the place where the stock is most likely going to turn and the place where we can enter with the least risk. This can be done by looking at the weekly chart. 

Thanks for reading, and I will see you tomorrow! There is a list of stocks below that should help you in getting a list started with strong trending stocks. Enjoy! 

$SPG - $PSA - $GPOR - $SBUX - $CLH - $HOG - $CP  - $CI - $AAP - $IF - $TIVO - $K - $YHOO - $NTI

And finally, the chart I was talking about -- 

Leave a Reply.