Hello All,

Here’s a recap of yesterday morning’s visuals and sentiment with emphasis added:

As we noted, we couldn’t find a fresh and safe bullish name to work with on Tuesday and now we know why.  However, despite many bear names being covered this week, and the markets looking heavy, we’re not immune to risk!  If equity markets open as ugly as it appears they will, we could be entering trades after some of the reward potential has been removed but with the risk side of the equation having increased.  So, be careful out there!

Unsurprisingly, the futures have been volatile overnight and this morning.  So what next will head our way?  Here’s out thinking…

Paradoxically, despite so much swirling, we have little to add right now.  When the markets become this volatile and in jeopardy of breaking down hard, below trend, the Plunge Protection Team often enters the fray and buys the right names to calm nerves and sooth psyches.  Is that what we saw yesterday?  Perhaps, we may never know but what it did show is that we’re firmly entrenched in “guessing game” action stemming from news and other potential maneuverings by the authorities.  That makes it tough to play the vanilla swing trading game because moves that typically take days to play out (think last week’s nice ramp), often play out in mere hours.  Consult sub-daily charts for guidance if you venture into this maelstrom but the fact remains that it is more like guessing and less like predictable swing trading action.  Thus, risk is elevated.  It’s that simple.  This game is about risk and reward but it’s also very much about probability.  When the reliability of forecasts drops, that’s just not good news for us.  So once again, be careful!

We’ll leave things at this for now, straight from Jesse Livermore himself:

“The desire for constant action irrespective of underlying conditions is responsible for many losses in Wall Street even among the professionals, who feel that they must take home some money everyday, as though they were working for regular wages.”

More when warranted!

Thanks,

Wayne