The title of this post probably best characterizes the give-and-take aspect of this market. Many will call it complete randomness, I tend to believe it to be a case study on mass psychological behavior. You have a lot of people scared to death that they will not be long at the very bottom of this market, and as a result they are trying to catch a falling knife all the way down until their portfolios are worthless.
Honestly, I could careless about calling a bottom in this market. In fact, I will be one of the few traders out there who will boldly and proudly say, "I DO NOT KNOW HOW TO CALL A BOTTOM IN THE STOCK MARKET!" Boy, those caps can really by annoying for readers, eh? Instead, when the market does bottom, I'm not going to try to go 100% long right away. I'm going to test the waters some and see if the bottom is indeed legit, if it is, I'll continue to add more to my position and create others. I could honestly careless about getting the exact bottom right.
By the way if you remember a couple of weeks ago, I was writing about how the SEC ban on short selling was creating dramatic selloff , you should then take note on the market action today, where besides those out there trying to nail market bottoms, much of the rally late in the day had to do with the shorts covering their positions (i.e. buying back those borrowed shared they sold previously). Just some food for thought.
Also, Google reported a pretty descent quarter, but it will be interesting to see how much of those gains were priced into the late day rally that we got today. I'm guessing much of the surprise was already priced into stocks. We'll see!
Here's the Nasdaq and S&P charts…
