Picking Up Where We Left Off

November 15, 2007

The rally in the stock market on Tuesday has become a distant memory as most would testify was nothing more than a traditional dead-cat bounce. Our strategy at Shareplanner is not to be bias to the long side or the short side, but to be on the “right” side; meaning, it’s not necessary that the market is in an upward trend for us to trade. We are indifferent to trading long as we are to trading short. So then, with today’s action, a trending market to the downside is becoming more and more of a reality everyday, especially since the market failed to rally off of Monday’s huge gains or at least hold onto them.

As stated in yesterday’s commentary, the one consistency developing in today’s market is that traders are very nervous and don’t trust the market whatsoever. This is most clearly seen in the tendency to sell positions going into the close, in fact the way it has been recently, if the market is trading sideways or down, the street tends to get rattled, and the selling starts flooding in. This is understandable considering the large gap-downs that we have had lately at the market open, making most investors worried that holding onto profits overnight may not allow them to get out at a descent price if the indexes opens 1% down, like it is accustomed to doing.

Let’s take a look at the Charts…

The NASDAQ traded sideways to down for much of the day, but finally gave in at the end but recovering somewhat off of its lows.

The S&P had a little rougher going then its counterpart breaking the long-term trend line, and doing so on increased volume. Capital preservation is a must, and we will begin to look at scaling out of our long positions and begin initiating some short positions.