Thursday, July 30, 2009

Changing Behavior

The first three trading sessions of this week, the market open and traded lower in the morning, and then it slowly climbed back up and closed with a surge of buying to regain all the loss grounds given up in the morning trading. Today, the market opened up strongly, and then it retreated and confined itself in a trading range until near the end of the session. During the final hour of trading, the market tries to rally in an attempt to move itself at least back up to the intraday high. The rally failed to move the market back to its intraday high and ended the trading session with a spur of selling.

What happened in the market today is nothing new, but what is new is the market has changed its behavior, from a buy-the-dip to sell-the-rally. This change in character tells me to be cautious of a possible pullback. With the underlying technical that already signaling the market is over extended, I will be a bit quicker to pulling the trigger to take whatever profit the market gives me. I worry about the runaway moves later if I happen to miss them. For now, I am more in the capitals preservation mode than being aggressive long or aggressive short.

The daily charts below give a broad picture on what is going on, but the real picture is hidden in the intraday charts. Who knows, maybe after tomorrow’s GDP report, the market will rally big time. All I know for now is there was a change in the market's behavior today.

Daily charts:

Intraday Charts:

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