Be Patient and Look for an Edge

 | Nov 14, 2012 | 10:48 AM EST
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The pattern of a mildly positive open and a quick selloff continues. Typically, support turns back up at midday but the close is poor, which keeps the mood negative. As long as early strength is faded and the market closes weak, we must give the benefit of the doubt to the bears.

The bounce buyers are still trying to catch a turn but they have been burned again. The best thing that could happen is that they give up and turn bearish. While the market action has been ugly lately, it's lacked extreme emotion and there have been few signs of panic. Panic may not produce a bottom, but it helps move the market to a lasting low much faster.

Downtrends are always trickier to trade than uptrends, but this one has been worse than usual because it has been a slow drip lower without any major drama. The intraday movement is practically random, and the dip buyers have been consistently disappointed when the market doesn't close well.

Once again, I have very little going on. I'm doing minor day trading but mostly staying patient while looking for a better edge. Trying to call a bottom in this market isn't the way to go, so I'm doing my best to avoid thinking that way. I'll look to buy strength, if we ever see any, rather than weakness.

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