Thursday, July 29, 2010

$Cash Remains The Best Position in the $Market - Careful of the $Bull Trap

While I continue to monitor for changes in the trend, I believe that cash is the safest play.  As much as I'd like to believe the action in the leaders, I have alot of  suspicion and for good reason.

Most leaders have only been able to muster one good day since the follow through.  Many came on below average volume, while the one's that did have strong volume, failed to follow through with more volume over the following days.  Most breakouts have been retraced in almost all of the leaders and are on the verge of failing.  They need to hold or failure will be the next step.

As I noted in my Monday blog, the market had reached an area where failure or a shakeout was extremely likely.  It did not take to long after the post for the market to stall and reverse.

Right now it's best to continue to maintain watchlists and monitor leaders from a distance.  With next weeks big job report, there might just be too much uncertainty ahead of it.  I would not expect the market to do much ahead of the report.

With the slow summer trading ahead of us, the worst case scenario is for the market to keep drifting up in the face of low volume.  9 out of 10 times this has led to a major Bull Trap.  So let's get a nice quiet pullback over the summer and setup for something big in the fall.

If you're into shorting, there are now a good amount of setups that are ready to break if the market heads down.
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