August 28, 2008
A strong GDP report followed by a drop in jobless claims did wonders for Wall Street today – not to mention the fact that oil saw weakness in light of a brewing tropical storm in the Gulf.
In regards to volume we are starting to see somewhat of an increase in capital pouring into the markets as volume has steadily increased over the past few days. The S&P looks as if it may be readying itself for a breakout to the upside, while the Nasdaq managed to breakout of the low volume pullback channel that it had found itself in for quite some time now.
If we’ve learned anything about this trading market, it is that no matter how well the market is behaving a 2-3% sell off can come out of nowhere for the general markets. So regardless if you are long or short, you are better off fading your entries; meaning wait for a rally to short and wait for a pullback to buy. Buying on strength and selling on weakness which is a solid strategy in a trending market, is not working at all in the current market.
Here’s the Nasdaq and S&P charts…