We have shake-and-bake action as volatility picks up. Apple (AAPL) is the obvious culprit in the Nasdaq, but there's no shortage of stocks jumping around today. Breadth is still around even, but we don't have much leadership. Gold is up but oil has reversed, and you can see that many traders are tightening defenses.
What's interesting today is bears are showing greater resolve. They let the dip-buyers do their thing but they are fading the bounces more aggressively. They are selling the rips with much more vigor, but there is still fear of being caught in a squeeze like the one we had at the close Tuesday.
I've been lugging a fairly high level of cash lately as there are fewer appealing chart setups. I'm still knocking out decent long trades, but I'm not inclined to carry them for too long.
I'm encouraged by this high level of volatility as I think it will lead to more and better opportunities, as opposed to lopsided, one-way action, but there is still plenty of downside risk.
Keep in mind that tops are processes. We generally don't suddenly fall apart and go straight down. The recent strength has created a big supply of underinvested bulls who will provide support and won't disappear until they are disappointed several times.
It's a good market for opportunistic trading. Stay on the hunt and be careful not to get caught in a sudden swoon. The number of reversals is picking up sharply and that tends to be contagious.
More from James "Rev Shark" DePorre: