What Goes Up Must Come Down

Good song, bad market.

Another ying yang day.  This is one of those days that doesn’t feel real.  It feels like Friday afternoon traders locking in gains from what worked this week.  Active traders made money on oil, drillers, copper, and being short financials.  So, they sell oil, drillers, copper, and cover their shorts on financials.  Up volume to down volume is very weak today and the overall volume is very low.  It may be the lowest volume since the end of May. 

Speaking of May, this market looks just like mid May.  We were heading up for 2 months, dropped sharply, then rallied for a couple of days on weak volume only to drop.  We’ve rallied hard since mid July, dropped sharply this week, then rallied today on very weak volume.  What happened at the end of May was the volume picked up and the selling intensified.  We’ll see if it plays out that way.

The best bargains I’m seeing are still in emerging markets and materials.  Don’t dive in though because the volatility is still high.

Keep your powder dry and I’d be selling positions if you haven’t already.  Continue to keep your beta as close to 0 as possible.  Still not at an extreme.

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