It is going to be over 60 degrees here over the next two days. It was 7 degrees last night. Wild weather indeed!
Extent of the Damage
A day or so ago J.C. Parets of All Star Charts asked on Twitter what would be the least expected market action going forward. I offered two:
1.) A slow grind higher for another 10% on the SPX
2.) A fast 10% collapse over a few days on the SPX
What is most expected right here is a 3-5% pull back (depends where you start the measuring) in the broad indices and then a resumption of buyer interest and the primary uptrend. As this is 2012 and not 2011 I do prefer that to hold true.
Looking over charts tonight I see plenty of substantial damage to many names. What's even more dangerous is some names and sectors are showing tempting hammer prints right now, just daring you to take a shot on a rebound. Silver miner EXK is one and there are many names in the metals sector looking the same (click for larger view):
A name I like to track because it runs fairly predictable within some set ranges is TPC. After today this stock is set to go into the lower range once again:
In short I am defensive here and will be looking for confirmation of some reversal prints and for battered names to firm up. The very expected dip has now arrived. It's not my trading style or really an option for me to watch movement all during the day to then pounce so I will not be trying to grab a bottom here. Should things settle out and buyers return there will be plenty of time to get back aggressive. If things get worse then I will be limited in exposure. It's a muddled picture right now so clearly my feelings on the market are muddled.
Today I closed my WFM trade for -0.8% to have a larger cash position. I still hold BANR and WRI.
Have a good night.