As I mentioned in my last post two days ago, the market had been coiling. This leads to trending conditions. As I said in my post, “Watch for volatility and activity to pick up near term.” It certainly did today!
The market began selling off overnight breaking below yesterday’s low before the US Open. Unless you were trading in the overnight market, it was difficult to find a good trade after the US Open. I have found it best not to try to “make a trade” when one doesn’t exist. Being patient on high volatility days like this and picking your spots is far better than chasing the market or getting frustated with the whippiness that can sometimes occur in expanding volatility.
The first pullback didn’t occur until almost 10:00 AM ET. But by that point, the market had already fallen 18 points from yesterday’s close and was not far from a multiday low. How much more can we expect from the market? It was no surprise to see stopping volume come in at B.
Patience is a virtue and after the market rallies for almost three hours on decreasing volume, we get an UT/Top Reversal that led to quick gratification for shorts. A little later in the afternoon an overbought position led to another sound short. (Red Arrows).
Lots of weakness today with a good pickup in overall volume. I’ll be looking for another short opportunity on any rally above the 1300 level tomorrow.
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