MONEY BURNING MOOD

Yesterday all US indexes did nothing. Except Russell2000, it could gain up to historical new high.

• Dow +0.11% 
• Nasdaq +0.10% 
• S&P 500 -0.01%

It is a typical scenario. The market now is hesitating and don’t know yet go up or go down. The volatility is huge during the trading session. The futures out of open trade are pretty tight, but with the opening bell the nervousness and volatility jumps up to high levels. The market is in yo-yo mood. By the end of the day doing nothing, finishes at the same level, but during the trading session the investors pushing up and down the prices enormously. I talked with some day traders in the last couple of days and all of them are freaked out because the volatility killed their systems. This kind of choppy period of the market we have to me more cautious as usual, don’t be burned out. The problem for most of the traders with these burning days they want to catch the market and make short and easy money. But it is not possible. They get in and stopped out. Get in again and stopped out and again and again. And, they continue until the money is shrinking enough and they don’t have enough money when the real trend will occur. This is a typical money burning period.

How long it takes this burning mood? Might be some days or might be few weeks we never know. The clear indication of the end will be if the SP500 close clearly over the historical high. But, now the momentum is pretty week and Mr. Market wants to make the investors frustrating and lost. After a period of this hectic trading, many investors will say – enough now. At that certain day will the market go up to new highs.

These trading days more about the strong nerves. We have to gnash our teeth and only trade when the real trend occurs. Don’t do any scalping or try to catch the top or the bottom. You can’t do that.

The VIX index also show some increase in volatility.

The BFM Assets Team.