Bouncing balls…

I am not sure how many short-term traders were fooled by the market today, but I confess I am one of them, and paid a pretty hefty price for it.

All was set to rise this morning, when the market initially opened. After all, we’ve had some pretty positive news from the Federal Reserve regarding the bank nationalization process, and the momentum from the spike yesterday seems to remain.

Things start to be ugly after about one and a half hour after the market opened, and after almost everyone was thinking that S&P was well on it’s way to 790, if not even test the 800 points level.

Within an hour, the S&P gave up all its gains for the day and finally fell to red two hours later.

Most of the major financial news attribute such a day to the decline in the health sector, which is, most of the time,perhaps one of the most insignificant and stable sector in the S&P index.

However, to me, that is just the market taking back some of the over-zealous buying activities after a day of insanity.

The evidence that the market could no long sustain its gains was pretty evident in the last half an hour of trading on Wednesday, with a 15 points drop.

Unfortunately, the market was still largely in the mood of celebration and S&P futures were traded higher even up to the minute before the market  opened today.

However, for those who were taking a long position today, there is really not a lot to worry about, the market is likely to regain some of the losses today, although without any good news, the chances of hit 800 tomorrow is not quite likely.

For the next couple of days, expect some huge volatility like what happened today. At least till the market start to find a new direction, stay put if you do not want to take huge risk, or keep a close eye to your tick charts if you want to minimize your loss.