Despite positive news from the Dallas Fed Manufacturing survey and new home sales data the market sold off. The NASDAQ led the decline closing lower by 1.95% followed by the Russell 2000 down 1.71%. Volume overall was lower than Friday, but Friday's volume was exaggerated by the annual Russell rebalance. Price action is most important with the averages closing off their lows, but overall price action continues to be weak. It appears now Friday's market was merely propped up; engineered to assist with the Russell rebalance. We remain in sell mode and today's sell off confirms we are in a very weak market.
We can certainly blame Europe for our woes, but in the end price is all that matters. Commentary on whether or not Europe's troubles or the United States fiscal cliff is to blame really is nonsense. Price will always lead and by the time you get done figuring out what may or may not happen the opportunity to take advantage may pass you buy. Even worse, if you are wrong do you know where you get out? In addition to following price you must practice a sound money management discipline. What good are entries if your exits are poor?
Money management is certainly something many traders have yet to master. Where do you exit? When do you exit a losing or winning position? Have a sound plan on when you exit a position and execute that plan. Do not let your emotions take you away from your game plan. Your emotions are one of the hardest things to master and it is vital you do so to become a successful trader.
We are still witnessing a lot of downside pressure on plenty of stocks. INTC is one of them, but there are others. Signals on the short side as well as inverse ETFs are presenting themselves to us. After Thursday's rejection at the 50 day moving average for the NASDAQ we are still primed to test June lows. Perhaps we can turn things around and head higher, but there is a ton of overhead resistance. One can look at Thursday and figure it out. Remember, we are in sell mode at Big Wave Trading and will act accordingly. We have yet to see the situation turn for us to get long this stock market.
Get a game plan and join Big Wave Trading!
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.