Key Reversal?

Was this the reversal we’ve been waiting for?  Afterall, key reverslas typically come in the middle of the day on light news.  But I don’t think this was it.  We’ve seen midday reversals during this horrible market.  All were selling opportunities unfortunately.  Eventually though, one will hold.  Today’s reversal was strange because there were two reversals in one day.  First, we opened up strongly only to reverse and head down, then we reversed and ended up.  It’s hard to analyze a day like this but I did notice that the volume was heavier on the way up than it was on the way down.  That’s a positive.  But, at the end of the day taking everything into consideration, we had more downside than upside volume and many other internals weren’t that strong. 

The market is basically moving sideways right now as it congests the big declines earlier in the month.  It’s risky to be short and it’s risky to be long.  So, how do you play it?  They same way we’ve been playing it.  I’m playing it with about 15% equities overall (the rest in cash & bonds).  That gives me some exposure but I sleep a little (just a little) easier when the Dow falls 500, 600, or 700 points.  You have to continue to be patient and wait for the market to prove itself.  We still haven’t had two up days in a row this whole month.  That’s the key.  Once we have two up days in a row, then we can start to think about buying.  Until then, continue to exercise caution.

I’m on my way home from Nashville, Tennessee.  Just a day trip.  I’ll be back on the air tomorrow morning at 7:00 a.m. CST.  (actually 7:15 a.m. CST until mid November)

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