Hot and Bothered

Days like today are not surprising to me. In bear markets, we can experience multiple high percentage gains eventually followed by a further move down. That is until a bottom is put in and the market moves up.

The reason for such excitement on days like today is the amateur’s never-ending desire to catch the bottom in markets. And there is so much money on the sidelines that any hint of a bottom brings a tremendous amount of cash in. nasdaq volume (as represented by the QQQ etf) was much higher than yesterday, but Dow volume was about flat (represented by DIA). Nonetheless, that is enough to get bulls to add to up-trending positions and we may have a short term (or longer) rally in the works.

Of course news could come out tomorrow, especially from Europe, that could sink or surge the whole deal. we also have many large market traders and investors advising to sell on rallies so any sustained move has a lot to overcome (here’s an example here on Fox).

Bottom line, as big as the day was, it just brought us back to where we were a few days ago. The trick would be to find investments that will break out of ranges and appreciate nicely even if the market stays rangebound. let me know if you find one:)

Note: this article is meant to be some helpful thoughts to share and not investment advice specific to you. Please consult your own advisor regarding investment and financial decisions. See our disclosures page