Market Continues To Selloff, With Volume Picking Up In The Final Hour; Don't Be A Hero Out There!

Stocks proved, once again, why it is silly to try to call a bottom. The bottom callers and the oversold bounce bulls were given a nasty surprise today. The SP 600 led the way to the downside dropping 2.4%, followed by the Nasdaq's 2.06% drop, followed by the SP's 1.59% decline and the DJIA's 1.63% decline. What made this selloff so bad today is that the trend was a nice steady pace down all the way into the close. Not to mention the follow through of the downside to the after-hours future market.

The drop came on higher volume. However, this was comparing volume stats to the pre-holiday trading Friday. So it is hard to call this a distribution day but since the selloff was so intense I think it is safe to go ahead and call it one.

The breadth was terrible also with decliners trouncing advancers by a 3-to-1 ratio. Today's action was very negative.

It is obvious traders are very discouraged and are trying their best to come up with an answer for this selling. We, however, do not need an answer. All we need to know is the big boys are selling and we need to step aside, for now.

The positives to look at on a day like this is that for us to have a really good tradeable bounce we needed to retest the lows. So far it looks like that will not be a problem. And you can not say their is irrational exuberance in the bull camp. Traders are getting pretty darn negative. And, finally, the rally attempt is still in tact until one of the indexes goes below last weeks lows.

The best thing, once again, is to stay calm and keep a high level of cash on hand for the next rally that WILL come around again. Trust me, the more cash you keep now the more of that money you can put to work when stocks are ready to make those 100% plus moves again. Now is not that time. Three out of four stocks follow the markets trend. That trend is very very down on all time frames.


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