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When It Falls It Falls Big

|Includes: SPDR Dow Jones Industrial Average ETF (DIA), FAS, FAZ, SPXU, TNA, TZA
Over the past week, the major stock market indexes have rallied higher on light volume. The bulls in the media have been out in full force over the last few trading days shaking their pom-poms and cheering the markets higher. The European debt crisis was being swept under the rug as if it did not exist. High oil and energy prices were being viewed as a positive for the stock market and the U.S. consumer. Where does all of this irrational logic come from? When we hear some of these people in the financial media talk about all of the positives in this economy and this stock market it makes us wonder if they are really from Earth or just living in Mars.

This afternoon, reality is setting in as the major stock indexes have declined on the heaviest volume since November 1, 2011. On that day, the major stock indexes plummeted lower as well. It seems that these stock markets rise on light volume and decline on heavy volume. This is not a healthy market, it is a traders market. The moves in this market are so large from one day to the next that traders and investors must really know when to get into a trade. If you are just one day off in your timing the move can be over. I cannot begin to tell you how many traders and investors wanted to jump on board the bull express yesterday. We alerted subscribers to get ready for a sell off. This is why we use charts and do not look at the news. Remember, when these markets drop they drop big. The news is simply just noise and there is too much of it to even pay attention to it. Learn to read the charts and forget the news.

Nicholas Santiago