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On Monday, the Nasdaq opened flat and began to sell off. However, it found its low early on and after much chopping around, managed to close well in thin, pre-Fed trading.
The good news is that the market failed to "come apart at the seams" after Friday's debacle.
The S&P, which was also choppy, managed to outperform the Nasdaq. It held above Friday's low and also closed well.
So what do we do? As I've said before, it doesn't matter what the Fed does. What does matter is how the market reacts to what the Fed does. Therefore, don't be a hero and take positions on what you think they may do. Also, remember that the market will likely make several false moves before the real intra-day trend (if any) sets in. Although tonight we have a plethora of market bias buy signals, I'm wondering if they (mostly VIX related) could be caused by a pre-Fed aberration. Whether this is true our not, based on the lack of decent setups, low volume, choppy trading and, of course, the looming Fed decision, I think I'm going to take a day off from equity trading.
Should you decide to test the waters, oil service ($OSX.X) still looks vulnerable. I am somewhat concern that we didn't see much follow through on Monday, but it still seems to remain in trouble nonetheless.
Considering the above, Smith International (SII) and Cooper Cameron (CAM) both still look poised to resume their strong downtrends.
It's Not Just You
I was too angry to write about this on Friday. Now that I've cooled off, I figured you might get a kick out of it:
If you ever think you're the only one who gets hit with technology problems, listen to this: On Friday, some moron driving an excavator, scooped up the phone junction box (located across the street from my office) and deposited it about 50-feet away. God bless the telephone repair man who worked in 100 degree heat, 95% humidity to restore the lines.
On a lighter note, I noticed someone flipped over the contractor's port-a-potty Friday night (I swear it wasn't me. I admit the thought did cross my mind when I saw the driver enter it with a newspaper earlier in the day).
Mr. Bow Tie Himself
Several of you emailed to point out that the quote I referred to in my recent trading lesson was from Jimmy Rogers, Jr. While thumbing through my tattered, torn, dog eared and highlighted copy of Market Wizards to confirm this, I came across another quote from him that I thought was relevant:
"Wait for something to come along that you know is right. Then take your profit, put it back in the money market fund, and just wait again. You will come out ahead of everybody else."
Best of luck with your trading on Tuesday!
Dave Landry
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