I did not like the rally from the start this morning. Once I could see that it wasn't going to hold, I made the decision to move to cash. Even the bounce this afternoon was fishy as volume decelerated from this morning. There are several problems:
1. The market is uncertain about everything.
2. The markets rallied the 2 - 5% and stalled at their 50DMA as I thought they would.
3. Powerful volume breakouts failed to make similar price moves. (I know it's one week into a
rally, but at least some usually have powerful price moves.)
4. Other Breakouts were weak on volume or stalling.
5. With such a strong opening and no breakouts, that's a problem.
6. Leadership in the market is thin.
The major market averages will most likely try and test the 50dma ( 1- 2% higher from here)before going lower. Considering tomorrow is window dressing (quarter end) and early next week is a Jewish holiday, volume should remain light and the bulls should have their way. After that, I would get out of the sellers way.
If you're still long and are nervous, my advice is cash, no need to wait for the breakdown, or at least cut your positions in half. Never stay in a position when you're not sure what to do, it just leads to bad decisions. If you're a trader, look for shorts, next week should be the optimal time to start shorting (by mid week the latest). My short setups all make me feel that the market just needs to stay up for another 2 - 3 days, then they will be perfect (aaaahhh, nothing ever perfect in the market). Don't stop looking for longs either, we haven’t rolled over yet, the rally may still find it's footing, but I doubt it.
I'll flip sides if I have to!!!