With the ugliness of the presidential election finally behind us, some market players thought we might see relief buyers provide support. Instead the action reflected a great amount of unhappiness with the results and turned attention to the looming problem of the fiscal cliff and the deterioration of the economy in Germany.
A big part of the problem was that the market didn't have a very good technical pattern to begin with. It already had pressure from poor earnings, economic issues and the problems in Europe. The spike in the indices Tuesday didn't help to provide a favorable setup for the market to deal with the election. If it had not run up already, there was a better chance of a gap down and then a recovery.
Although it didn't close at the lows, there was nothing positive about the price action today. The market breached the recent lows, had a poor intraday bounce and breadth was very weak. It showed all the signs of a market that can easily gain momentum to the downside.
I tend to stress how important it is to respect the market trend, and after a day like today, it is important to do so again. The way to make money in the market isn't to try to buy the exact low but to buy when there's the best chance of sustained upward movement. You make the big money by riding trends, not by calling turns.
Stay focused on the price action. It is obviously poor and that is a signal to stand aside and let it play out. We'll see bounce action eventually, and we'll see the trend turn back up. But be patient and don't be too quick to assume the worst is over.
Have a good evening. I'll see you tomorrow.