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Stocks Take a Swan Dive After Tuesday’s Gains

|Includes: Bank of America Corporation (BAC), DBS, DIA, QQQ, SPY, UGL

Here we go again, stocks fall to near session lows by the close as sellers dominate end of day trading. Early morning trading saw stocks fall as the market witnessed zero follow-through from Tuesday’s rebound. The lack of follow-through or even support for stocks is a big tell the market is not ripe to rebound as one may have wished for. Volume was lower on the day, but volume here only matters to the upside as price action is going to win on the downside. Volume will matter when this market actually does find a volume and confirms a new market rally. Until then, we’ll stand aside as today provides us proof cash is king.

Financial stocks were the group leading this market lower. These stocks are usually the group that leads the market off the bottom, but unfortunately usually leads the market lower. BAC stock posted news it was selling assets to raise capital. The market DID NOT like this announcement. Financial stocks are simply toxic at this point in time and are massive falling knives. It is a losing proposition to try and grab a falling knife. They are dead money.

Another losing proposition is trying to pick a bottom here. Often times we see traders “call” the market bottom and go all in. Unfortunately, the lure of catching a market bottom is too much for some, but only leaves them in the poor house. Not too mention it can destroy their confidence in trading ruining any chance of them coming back. Stay patient here, again there is NO NEED TO BE A HERO! There will be plenty of time to get back int othe market.

We held yesterday’s low therefore keeping the attempted rally day count at two. I have to chuckle to myself because it is obvious that any rally coming off these lows will be sold into. And I am assuming we can rally here. We are likely to continue to see a very choppy market for the short-term and it will be very dangerous for many. If you are new to trading it will be best to stay aside and wait for conditions to improve. We want high probabilities, not low probabilities.

Stay patient!