This day couldn't end any sooner. In fact, I would've pulled the plug myself, if they let me. No, better yet, I would've thrown myself on the transformer if I knew it would blow out the power.
I couldn't pick a winner over the last two days, if you gave me tomorrow's paper. Actually, everything I bought, broke out on heavy volume, except they ended up failing. But that's what trading is about. You win some, you lose some, but in the end the dollar amount of winners exceeds the dollar amount of losers, hopefully.
The NASDAQ ate alot of us for lunch over the last two days after a somewhat confusing CPI report. After last weeks phenominal run, on heavy volume, it looked like maybe the market would throw us a bone, and let some of the new breakouts run or at least hold above their pivot points. Wrong!!!! It actually decided to pull back to its 50% retracement area on lighter volume, and have most of the recent breakouts fail (For me, this means all). The lighter volume, and the good breadth yesterday, was actually quite consoling. These two indicators, make me believe that the market is just taking a well needed breather, and continues to confirm that large caps are weighing down the averages. If we're going to have down days, these are the type you want to see.
Even though I believe that we're almost ready to resume the uptrend, I will be fishing through the charts tonight to find some shortable candidates. My buy list is pretty long, but most of the stocks on it have retreated some from their breakout points.
This is not the time to get emotional. Don't try to show up the market by doubling down or moving down your stops. Let your stops hit, and look for other opportunities, whether long or short. You may even get a chance to re-enter the stopped out stocks on a re-breakout or breakdown. If I'm right and this is only a pause, the breakouts will come again.
Tomorrow Alan Greenspan speaks, and everyone will be listening. If his speech hints toward more interest rates hikes the markets will fall back into it's most recent base. If the volume increases, and the market can't hold inside that base, we're headed for the May low, in my opinion of course.
If this rally proves to have been a bear market rally, then the market has formed the left side of what I believe will be a double bottom pattern. In any case, I'll be ready after tonight, even though I should've been ready already, to capitalize on the downturn.
If you have to remember anything, remember the following:
Cut you losses short. Let your winners run, not your losers.