The market's gap-up open was sold once again this morning, but we seemed to have a little better underlying support.
We are so grossly oversold that the bulls keep looking for a snapback, but that's been a very crowded trade and hasn't worked very well. All of the studies and stats point to good odds for such trades, but they aren't working very well.
If you're day-trading the indices, the important thing to remember is that even if you feel like the odds are on your side, you still need to have an exit plan in case you're wrong.
The biggest mistake traders make in tough markets is that they don't have a clear plan to escape if a trade goes awry. It's so easy to freeze and do nothing while you tell yourself that things will bounce back.
But the nice thing about having a clear exit plan is that it frees you up to be a bit more aggressive. When you know your risk, you can maximize your efforts -- because you aren't acting emotionally. (Your biggest danger is always emotion, so you have to find ways to take it out of the picture.)
I'm trading the ProShares Ultra QQQ ETF (QLD) today, although I'd really rather focus on some individual stock-picking. However, there just isn't much opportunity yet.
The problem with building individual-stock positions is that doing so requires a timeframe that isn't working in this market. If you want to play, it has to be very fast -- and the easy way to do that is with indices.
We're seeing some decent bounce action now, which will hopefully give us some opportunities in individual names. I do have Pacific Biosciences (PACB) and Rovi Corp. (ROVI) on my radar, but I'm not doing much buying at the moment.
