Online Stock Trading | Traders are Playing Chicken with a Freight Train

Traders are Playing Chicken with a Freight Train


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Traders are continually trying to find the ultimate bottom in this market. Taken positions in beaten down stocks like AAPL, GOOG, MSFT, CSCO, MER, LEH, GS, and dare I say BSC? Yes! How can one sit back and look at any of these charts and say, “those are great looking stocks?” You don’t bet on a horse that has had a losing streak, you want to see a winner out on the track. However, stock market participants…traders continue want to catch a snapback. In this market, this strategy is not a lasting strategy.

We aren’t near a low yet, check out the New Highs and New Lows this past Friday:

hilo.png

Market bottoms certainly do not contain more lows than new highs. In order for any sustainable rally to occur we need New Highs crushing New Lows. We certainly haven’t seen any of this to date!

We are seeing the % of stocks over their Moving Averages moving in the right direction. However, there are still far too many stocks above their 50dma.

%above_ma.png

The Chinese market continues to look unhealthy, FXI is starting to look like the bottom has just fallen out from underneath it:

fxi.png

Notice all the distribution in the chart, this breakdown is ripe.

This market isn’t a healthy one, and with all the bearishness out there most would suspect a rally is coming.  However, I believe it will lead to an unseen market drop and we’ll get an ultimate washout.  It is imperative that we can be sitting on the sidelines and waiting for the destruction to occur and pounce on the opportunity to go long when it presents itself.  One must exercise patience, there is no need to be the hero!

Cash is King

Market Speculator

Last 5 posts in Market Commentary

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Comments

2 Responses to “Traders are Playing Chicken with a Freight Train”

  1. SSamson on March 16th, 2008 6:56 pm

    I’m really curious what resource you used for the market breath tables above. IBD has some of what you’ve included but it’s scattered about.

  2. Market Speculator on March 16th, 2008 7:20 pm

    Hi SSampson

    check out: http://www2.barchart.com/momentum.asp

    Thanks for stopping in!

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