ALL ABOUT YESTERDAY

I was away from the trading turret yesterday, but it looks like it was quite a day. The SPY had an outside range day (over 2 bucks) as it hit the low of the day in the first fifteen minutes of trading at its 50 day SMA (129.6 area), hit its high around noon at the top of the recent trading range, and then dribbled back down to the 131 area into the close.

My strategy for today will probably be to do nothing as I don't expect much action. Looking at the chart above, one can see that recently the SPY has been all over the board with several days of ranges in excess of $2 or twenty SPX points. Volatility reverts to the mean and hence I expect a quiet range bound session.

The IWM has been disappointing lately and it has been underperforming the bigger indexes. This is not a good sign for the near term direction of the markets and I expect lower prices all around. There is much angst in the markets as many stocks have "blown up" on recent earnings news and the recent momentum stocks are acting quite poorly (NDAQ BRCM MFLX TRID MRVL).

My strategy for now is to wait for my signals on the buy and sell side and not to hang on too long. All the momentum indicators look very bearish on an intermediate term basis, hence I will be trading and trying not to hold stocks for too long.