The confusing nature of the current market action can be easily seen by the fact that the DJIA and S&P 500 were down on the day while the Nasdaq and the Russell 2000 up. Breadth was slightly positive and volume a little better than yesterday's very light levels, but there is some very choppy action out there, mostly as a result of swings in the dollar and crude oil.
Although the market action is still pretty good, a lot of folks are concerned about the weak action in the financials. They are struggling, and the bearish argument is that the weak action is probably an indication that we have some more bad news coming.
One thing for sure about this market is that it hasn't paid to be too bearish too quickly. We have had several bear traps in the last few days. Just when it looks like we might be starting to roll over, the buyers provide support, and there is scrambling to find some longs once again.
I continue to feel we have some significant downside coming soon, but I'm going to keep playing the pockets of momentum while they last. I'll be keeping a close eye on the financials over the next few days, and if they start to break down more, I'll start some short-side positions.
Rev Shark Blog No Quit in the Bulls 5/13/2008 2:31 PM EDT I don't trust it, but you have to respect the surge.
Rev Shark Blog Jumpy Oil Roils the Markets 5/13/2008 12:56 PM EDT Volatility is high, and I'm locked into the short term.
Rev Shark Blog Bulls Continue to Supply Support 5/13/2008 10:55 AM EDT We won't see the expected pullback until the longs get punished a bit.
James "Rev Shark" DePorre is the author of Invest Like a Shark: How a Deaf Guy with No Job and Limited Capital made a Fortune Investing in the Stock Market. He is founder and CEO of Shark Asset Management, an investment management firm, and he also operates sharkinvesting.com, an interactive online community that serves and educates active investors. DePorre holds business and law degrees from the University of Michigan, is a member of the Michigan Bar Association and a former tax attorney and CPA. He lives in Anna Maria Island, Fla., with his wife and two children. Under no circumstances does the information in this column represent a recommendation to buy or sell stocks. Rev Shark appreciates your feedback; click here.
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