..Melt- up..

The name of the game in this volatile environment is 2x ETF!.  Up and down!  Well folks, in spite the fact we got an extraordinary hearty gain today,  this was most likely more unhealthy action.   It is just another 6%++ intraday range,  not the -3% bottoming multi- day range we're looking for to get sidelined institutions or fundamental investors into the market.   It's still the wild, wild west and trading ETF's, especially the Ultra 2X`s is the way to go until some leadership is shown.   Let`s face it,  finding a winner that lasts a day or two is almost impossible these volatile days.   Most people will wonder, isn't it good that the market went up 10%?   Yes, getting the market to go up big in a bullish environment is good, but we`ve seen this movie before.   A huge relief bounce in a painful market environment should be considered somewhat of an evil.

What does it mean then?    It means that the downward pressure is being relieved for the time being.    But, the bottoming process will probably be prolonged.     Most traders we know, who are trading this market still, are only gunning for the very short duration of this uptick.    Today just happened to be a great day, if you went with the right set of ETFs.  The ones we prepped this morning, SDS Short, SSO long  up 20% with the underlying SPY were perfect.

Besides the `get your gloves`ready Journal,  we thought early in the day this might have fire power and alerted.   If this market managed to break through 870-( 880 SPX to be safer),  we might get a chance to do some serious damage to the upside.   After we pullbacked at 87.71 SPY,  it was set to go off when it reached this level again.    When the breakthrough came,  the rest is simply history.   Yes, today's gain probably made the history books too, but almost every day does such this month.     We have a Fed meeting tomorrow and a GDP report due out on Thursday and at some point we`ll get a pullback.   Instead of waiting for this,  it is only right to take profits near the close.    Both of these events (Fed and or GDP), can provide some very unstable action for the market.    As this market is approaching the previous resistance,  our money will be leaning toward the bearish side,  we may get some catch up money flowing in the morning,  but that will probably be hit by profit taking by Fed time.   It will be interesting to watch the post- Fed market action.

Lately,  due to the lackluster earning reaction and the volatility level of individual stock plays, we`ve decided to stick to ETFs until leadership emerges or say Oil shows signs of life.  Still, if Oil shows promise, we`d most likely trade the ETF (OIH) instead of individual plays.    Honestly, when market is swinging 6%+ in either direction on a daily basis,  the best plays to follow the trend  is the actual index ETF themselves.     The 2x ETFs, at this moment,  are our favourite.      The ones we currently track/trade include  SSO/SDS,  DDM/DXD,  QLD/QID,  DIG/DUG,  which are the pairings for  SPX,  Dow, QQQQ and Oil.     Hopefully,  when the volatility of this market comes down to a more reasonable level, we can begin to look at some individual stock plays.    For now, the name of this game is ETF.

Bottom line, it is still very very chaotic out there and regardless how you want to approach this market, "protection of capital", is still the number one priority.     There's no need to let the daily wild swings pressure you into making unwanted trading decisions.    Even for the most hardcore traders, it is ok to sit out for few days or weeks at a time.     We are not here to prove anything,  we are just here to make a living and give some sane direction in insane times.