Market Buys the News as Bulls Come Back Strongly

Shorting yesterday would have had disastrous results. There’s an old saying: Never short a boring market. While this market has had an increase in volatility lately and the VIX has in fact broken out of its trading range (indicating an increase in volatility), the market over the past few days has been merely drifting. We were looking for the market to break lower yesterday, but because the signal was not clear we felt it better to stay sidelined. This proved to be the best course of action under the circumstances that ensued. Is the market ready to turn up here? That’s the big question that is now on the table. Today the S&P and NASDAQ alike put in a wide range bar, not unlike the way the market traded in early May and early June as the market rallied off the lows of what is turning out to be the market’s trading range. In fact, today was the largest wide ranging bar in nearly a year for the QQQQ. The last time such an event occurred was October 27, 2004. We encourage everyone to pull up their charts and see what occurred from that point.