Be careful what you wish for!

A very tough market for the Bulls. So many of them were praying for this pullback to get invested after missing or not participating properly in the run since April. Even if many of them caught the run certainly most missed out on the sharp move that commenced from the first London Terrorist attack.

Essentially there are three types of these poor Bovines. Type 1 seized the shallow pullback from a week ago and is now under water and hating life. They will probably sell at the bottom. Type 2 more resembles a "deer in the headlights" and although were patiently waiting for this opportunity will likely take no action what-so-ever. They will pat themselves on the back for not getting involved while the market continues to fall. However, they will kick themselves with their deer hooves for their complete inaction when the Bull market resumes without them. The third type will slowly scale into select positions but will not get aggressive until the internals show a clear change in character.

Every trader across the planet no matter how experienced they are, have been and will continue to be all three types, many times in their trading career. Try to focus during downtrends on being Type 3. This particular animal blends anticipation with reaction. Small anticipatory buys can yield a nice cost basis while larger reactionary purchases provide you with confirmation that the trend has changed in your favor.

Rates were down sharply today, largely due to a flight to safety to the bond market (another indication that fear is kicking in). AAPL and GOOG bucked the trend noticeably in yet another indication that traders are still looking for long-side trades. Notice however, that the action is happening in liquid, non market correlated technology stocks. These two stocks often trade different than the market as a whole. In fact we have known some traders who even consider them somewhat of a hedge, although we would never recommend that.

If You Held A Taser To Our Head: The market provided some exciting short covering near the end of the day but faded fast in the last half hour. The tempting Spikes will continue to tease us but so far indications are that this market is not done going down.

-Have a nice weekend-We'll see you on Monday-

P.S. Please e-mail us any comments that you have about our trading posts by clicking on the link at the bottom of each post disclosure. It only helps us to help you.

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