When you stop trying to force trades, it’s amazing how many will just appear.  Yesterday morning, I caught some good trades going long, as the NASDAQ formed a higher high candle on the daily chart.  We were due for some type of rally.  It helped that the VIX was back over 35.

So when I saw DIG clear its five-minute high.  I pounced.  The ETF moved to the 200 moving average on the five-minute chart, where I took profits.  I’ve said it before, and I’ll keep saying it.  The 200 moving average is an awesome tool for targets when used on intraday charts, such as the five-minute chart in this case.

I’m not going to get political, because that’s not what trading is about.  The perception on the street is important though.  I’m sure you noticed that all day long yesterday, it seemed that this bailout package, or whatever you want to call it, would definitely get done.  The market was moving up on that perception.  You have to take profits into that.  There were little facts, and only guessing games.  Now look at the perception of today.  The bailout package negotiations failed.  The market is sad, and stocks drop.  Everyone knows this package is going to go through, Yet, if you compare the reporting today, compared to yesterday, you’d think it will never get done.  Take advantage of that.

DIG gapped down today.  While I still think it will fill that gap higher, I pay attention to the facts.  There was the potential for a failed buy signal.  Which occurred.  The 20 and 50 day moving averages were sloping down.  That’s negative.  So I’ve got a few reasons to still stay bearish.  When DIG lost its pivot support of 70.54, I bought DUG.  The stop was placed below the low of the day.  The 50 day moving average is also a good spot for targets.  DUG stalled at its 50 day moving average, and pulled back from there.

I’m a big fan of stocks and indices returning to fill gaps.  You’ll notice the XAU and gold stocks are filling the gap from last week.

Oh.  And guess where the NASDAQ stalled today?  The 200 moving average on the five-minute chart.

If you don’t have a clue what to do in this market, you’re not alone.  After forcing myself to watch the testimony on the Hill the past few days, I don’t know if it’s comforting or frightening that they don’t have a clue either.

The markets got to give us a few more clues here on direction, before I make too many moves. Todd Harrison gives good advice for appropriate action in this market.

“Understand that opportunities are made up easier than losses and the ability not to trade is as important as trading ability.

Remember that risk management trumps reward chasing and profiting is a privilege rather than a right.

Most importantly, take the time to be mindful of the little things in life, situations that you may have once taken for granted.”

Oil stocks still have a gap to fill above.  OIH filled the downside gap yesterday, and I’ve got to believe, that upside gap’s going to be filled, before the next leg down.

The VIX is back up to 35 here, which would indicate some type of relief rally is due.  I’m quite happy just pulling small pieces out of this market.  Patience is still the key.