07/26/11 Market Action

Overall the major market indexes (QQQ, IWM, SPY) continue to be quite choppy. The QQQ seem to be the strongest, but the action in SPY and IWM cause my to remain cautious. If the SPY breaks 133 (See figure 1) it would cause me to be very defensive and probably close out (or place aggresive stops) any open swing trades. I think the SPY needs to break above 134 and hold above that level for me to feel more comfortable with initiating new swing trades. On the big picture we are still in a trading range for the past few months (see figure 2). In this type of market I am trading smaller than normal position size and I have also noticed that the time I hold a position is about two to three days. In the nice trending markets we had in 2010 I found that I was comfortable holding positions for one to two weeks.

Figure 1.



Figure 2.