Monday, April 18, 2011

The ball is in the bears' court

What a day! Undoubtedly, today belonged to the bears. But all is not lost for the bulls, as the market closed well off its lows for the day. That said, the ball is firmly in bears' court now. The bulls have proved themselves time and again over the last year, while the bears have struggled to get even a decent pullback going. As can be seen from the charts below, just this year, there have been some down moves of serious magnitude, but the bulls have managed to recover all the lost ground in the next 2-3 days most of the times. That's what makes the next 2-3 days important in my opinion.

Going through the watchlist I had posted yesterday, I am kinda surprised on how well most of the stocks held up. Was expecting the damage to be much worse on a day like today. But make no mistake, the above index charts have a bearish look to them. MA(50) is the next challenge in front of the bulls and it will give us a good idea of what sort of momentum bulls have left in them. So, how does one play markets like these? The answer is the same as what I have been saying last week. No matter whether you are long or short, end the day cash heavy. Not that I saw the S&P news coming, but this certainly saved me from serious losses today (had a 0.24% down day). Well, sometimes there is just no substitute for good luck!

Take care and good luck!

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