Lee,
My style is to play for multi-points - not scalps. I am looking for trends, not sideways market movement. I am a position/swing trader - not a daytrader. I would rather hold for 3-5 day runs, if not more on market strength.
Obviously, we are trading in a trendless environment. The 30% drop to the downside is resulting in consolidation. If one still believes in the bull, and that there will be a run later this year, you would be ACCUMULATING fundamentally and technically strong stocks at these levels and not giving it away to the market makers with each little subtle move. Those who are less bullish are hoping for further market erosion and cheaper prices. I figure later this year, people will regret selling their stocks bouncing in and out and will see their stocks up at levels where they shouldn't have sold it at.
Look at the Nasdaq - obviously basing and currently trading in a tight PENNANT. The range in that pennant has limited run in it over the course of the next 6 weeks.
Trading under the 200 MA as well as the 100 MA isn't a sign of strength! I look for a long, drawn out summer with tighter dayranges, lackluster volume.
Look at the volume - bleak with no momentum in it. Study the market charts and never fight the Fed!
More importantly, there was NO FOLLOW THROUGH to the upside after the Fed announcement! Going long is a losing battle.
In an earlier post, I mentioned watching CSCO to get a feel for market direction. I use CSCO as one of my gauges. After looking at CSCO's daily, I determined that unless if it gapped up, this stock was heading down and going to drag the index down with it. Trading long today, was not the way to go. What does this tell you about the overall sentiment in the market when stocks like CSCO, king of the long term investment holders, depreciate and fall out of favor?
I figure CSCO still has more move down as it is on the verge of making lower lows. The same goes for MSFT. Reduced volume, declining short term trend and close to making lower lows for the year. CSCO and MSFT are at the point of "proving themselves". I'd look for the market to shake out more to acquire these at lower prices. In that sense, going long, as you say, does have its opportunities in the near term, if you are seeking rewards further down the road.
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