Trading This Market Means Do Nothing and Sit on Your Hands

NEW YORK (TheStreet) -- There comes a time when trading the stock market means you must do nothing and sit on your hands. If traders have a proper risk management process that gives signals as to when they should be buying or selling they will be able to navigate around this stock market without getting hurt.

This last week of May is one of those such times. The short hedge fund community continues to push the momentum stocks to extraordinarily overbought levels. You may ask yourself why do these hedge funds continue to do that. The answer is quite simple: Because they can.

Wednesday was another typical trading day that saw a low volume move. This time, however, the indexes all closed down on the day. The DJIA lost 42.32 points to close at 16633.18 while the S&P 500 lost 2.13 to finish at 1909.78. The Nasdaq was down 11.99 to close at 4225.08 and the Russell 2000 was down 5.52 points to close at 1136.68.

The Nasdaq is still well into overbought territory according to my internal algorithm process. The Russell 2000 is slightly overbought while the DJIA is not. The S&P 500 was in overbought territory before finishing lower on Wednesday.

An important indicator not receiving much air time from business media or Wall Street pundits is the 10-year bond. The yield has slipped below 2.5%. Folks, this a "growth slowing" indicator for the U.S. economy. This is a preview before the release of the GDP number on Thursday. This fresh year-to-date high in price suggests a terrible GDP number.

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