Assessing Daily Price Moves

Yesterday saw some relief from recent selling and the market appears to be up again today. Keep an eye on volume, however.

Volume is an indication of the commitment behind a market move. If you're a bull, what you want to see are upward price moves on heavy volume and pull-backs on lighter trade.

Be cautious if you see the opposite; i.e., heavy volume selling and lighter volume pushing the market higher. This is an indication that the "big boys" are not behind the upward price move.

As I have said many times, no one knows with any degree of certainty where the market is headed. If you agree with me in my assessment, you will focus your efforts on managing risk for the purpose of containing losses when they occur.

Going long the market right now is a risky proposition. More conservative investors should be cautious about jumping in, but if you choose to "bottom fish" be sure to establish a stop loss. I have trimmed my portfolio somewhat the last few days, trying to reduce my exposure to further downside moves.

I have not declared myself a bear, yet. However, I want to see a return of volume to the buyside before re-adopting a decidedly bullish market bias.

Good trading!

Christopher Smith
TheOptionClub.com