Market Bounces!

I thought for sure today would be a repeat of Tuesday with the Dow Futures above 100 and true to form, the market opened with Dow down 200 points. It had the same frenetic pace as Tuesday but surely and slowly, the bottom buyers bid the Dow, Nasdaq, and S&P to positive territory. It ended down today erasing most of the early morning losses. It is days like this that I implore everyone to go to cash. The market volatility was incredible. I began to hear a lot of market pundits proclaiming that the market bottom was near, that the correction was almost over, or that this will not be a prolonged correction. Perhaps they are right. But if you delve deeply, majority of the leadership today was from the oil related stocks and the decliners outweighed the advancers by 2 to 1. That is a negative divergence from what we actually saw in the market today. The short term over sold condition has lead the fearless bottom buyers into buying the dip and totally routed the short sellers today. It was a good day for the longs. But, I continue to remain skeptical about this rally. I am not at heart a bear. I love bull markets that are trending strongly in a strong economy. But I have to listen to what the market is telling me right now. There is no future prognostications on my part. Only what the macro-economic factors are telling along with the what the market did today. That's all. I continue to see a lot of risk in this market. I see a lot of risk in the US economy despite what Ben Bernake says. I do not think that at least in the short term, the economy is as healthy as everyone makes it out to be. I tend to see the point that Alan Greenspan is saying now. I was critical of him for making the "recession" speech. But again, I think the mainstream media took that to the extreme.

In this market, the only thing you can do is to sit in cash or to trade around the volatile bounces. But as an example, today, I lost some money by being on the wrong side of the trade in CME which finished up above $5 today. Live and learn.

Good luck.