We can moan after back- to -back late day bouts of selling, we groan as well with the U.S markets flirting with October 10th lows at the close, but what's the point anymore!. If you're looking to buy or invest in this market, you're just looking for stability right now, any stability to show a bottom before putting money to work. You're through with moaning and groaning, you're exhausted now. Instead, you try to look for a silver lining here and there or maybe just an edge. Recently, we've noted, the U.S markets are lagging the crashes in percentage terms seen all over the world markets and may need to get a dose of their own medicine. In a Friday forum note , we said it wouldn't be a surprise if the outperforming U.S markets catch up to the action in Europe that day. It did very late and yesterday it did as well. This brings us to a new dynamic we may have get used and might not be a bad thing. Personally, recall the days in the tech bubble coming into the offices BMO Nesbitt Burns, checking the Bloomberg machine and being dependent that day to overnight action overseas, particularly in Asia. Whatever happened overnight, we'd be following up on in the U.S markets for the most part. It is very possible, we'll be entering this phase again with so much world turmoil underway that it's unlikely the U.S will lead a turn as another bubble completes it's burst in commodities. We also have an incredible fascination with the Yen these days.
This morning the Asian markets, Europe are all up nicely and the U.S markets will follow and probably end the streak of back- to -back late day sell-offs. Yes, that maybe premature to say, but sooner than later the bandwagon gets too crowded and we rally for more than part of a day. Simply, the foreign markets are not following what happened here late Monday and finding their own reasons to rally. The ducks may be lining perfectly, say we get a well behaved Yen, weaker USD, oil up and a technical reason such as flirting with Ocober 10th lows coming together all in one.
If/ when we get the prospects for a multi- day move, we'd look to trade the ETF's relevant to the market indices instead of trying to pick out individual stocks, most likely. Example, it is probably much safer to go with say a SPY to trade the SPX than individual stocks...DIA, IWM etc. For those with more risk in their blood risk there is the SDS 2X to short or long the SSO Ultra on the SPX. As we always say look to high beta stocks in any rally, but even now just to get your hands dirty and get your trading confidence back it may be easier to go with the very liquid ETF's.
Anyways, let's hope for that tumultuos Halloween week... as in a melt -up. It won't hurt to get your fighting gloves on in anticipation of such a possibility. Just always be on your toes for a sneaky jab...