Again, Keep the Time Frames Short

It's better to live one day as a lion than a hundred years as a lamb.

-- John Gotti

There probably aren't too many investors feeling like lions this morning as we deal with a stump day of trading. We have the post-Christmas hangover to deal with and the pleasure of a weekend coming up to use for recovery. Nonetheless, the market is open, and there will be some pressures out there to wrap up the old year and position for the new.

On a day like this, it is generally a mistake to expect anything particularly profound. There is little news, the trading will be very thin, and the market can easily be pushed around by program trading. Traders will find a few little pockets of action, but most of the market will likely drift around. European markets are mostly closed for the holidays, like we should be, and that gives us even less insight.

The good news is that the indices have been drifting around for several weeks now and really aren't in too bad a shape technically. We are holding some support, albeit weekly, but the setup does support some upside, and we do have some positive seasonal factors. The bulls have not been able to get much going over the past week, as we drifted down and then managed just a little upside on Christmas Eve. The action is not that bad.

What is bad is this news flow. This morning we have MasterCard (MA - commentary - Cramer's Take) saying that total retail sales excluding autos was down 5.5% in November and 8% in December from last year. General Electric's (GE - commentary - Cramer's Take) estimates are cut below consensus levels by Argus, and some are seeing a record contraction in Japan's industrial output.

This poor news isn't anything new, and we have been ignoring it to some degree lately, but when it keeps on piling up, it is awfully hard for us to keep shrugging it off and acting like its all priced in.

Until we see more life in this market, the best game plan is to stick with the very short term, protect capital and don't worry about building longer-term positions. There is no reason to play the bottom-calling game, but there may be some very short-term opportunities if you really want to work at it.

I think it's a good day for an extra cup of coffee.

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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.