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“Take That Bulls,” says Mr. Stock Market

|Includes: DIA, PowerShares QQQ Trust ETF (QQQ), SPY

Today was looking very constructive. That is until the last hour when the floor just completely collapsed. There was nothing orderly or friendly about that pullback (see: selloff). On top of that, volume was clearly much higher than the day before. That equals yet another distribution day on the indexes during the past month. I think this is like 5 or 6 now. Either way, it is a lot in a short amount of time and now throws the rally into question.

It is all about the next breakout. Higher or lower. I don’t care which way it is. I’ll just be ready and move immediately when it happens. In only two days we have gone from looking like a rally into the end of the year was in the cards to the rally looks dead. As we consolidate here we continue to be in a wait and see mode with our models in neutral.

I have added some short-side hedges that gave signals today which will balance out the longs I am holding. When we move one way or the other, I will cut my losses in the signals that fail and ride my winners higher. I don’t hedge to hedge. I had legit signals. I take them. That is that. This is what a professional trader and not an amateur part-time trader does.

This period has been way more volatile than I am used to during shifts in market momentum. However, 2011 has been very volatile yet we have gone nowhere with the Nasdaq only down .5% on the year. All of this short-term choppy movement and we have gone nowhere. The next trend will be in proportion of the trendless period so you know the next move should, according to history, be big. Whatever. Whatever happens happens. We will move quickly and accordingly.

I have no clue which way we are going to go. The market has no clue which way it is going to go. Nobody has any clue which way we are going to go next. However, you are going to read a lot over the next few days from a lot of people that have none of their own money on the line that will gladly tell you on TV and the newspaper which way we are going to go. Who are you going to trust? Them. Or the professionals like us at Big Wave Trading that do this trading game for a living? It’s your personal choice. You succeed or fail in your future based on the wise financial decisions you make today.

The buy and hold model is dead. You have to be active with your money or invest in someone active with your money that has a track record of success. There is no time to be lazy in today’s market.