Market Overview

This market is just not responding well. Oversold signals that have often worked very well in the past, especially price/volume reltionsships, have produced some initial moves as expected in the morning, but nothing is sticking.

The market is really starting to remind me of the Lehman era.

Yesterday I listed a number of potential short side candidates. My personal preference would be to set up some of these trades on a trending basis, meaning wide stops which can be accomplished with smaller position sizes to maintain risk management structure.

I would consider these trades to be of a longer term nature and not worry too much about daily gyrations, in fact, I might only consider the multi-day charts (2,3 or 5 day) to stay focussed on the trend and not daily gyrations.

Some of the stocks from yesterday that have underperformed today and thus make for good candidates would include:ISYS, ARUN, WU, TSO, VSH, MBFI (has actually done pretty well today, but is also in a pretty good low risk area), MERC, MDR (another that has done okay, but looks to be setting up well), NETL, TTMI, PCH, GBX.

The trick to these trades is to view them on a longer term basis, there will be bounces, daily or otherwise in even the worst of bear markets, thus your risk management has to plan for and allow for these bounces by having a sufficiently wide stop. You might want to take a look at the article I wrote last night on Trade Guild looking at the ISY trade specifically, which covered risk management and position sizing.

Even if the market can recover and can bounce, these trades in the long run should pay off.

If you have questions about specifics of any, don't hesitate to emil me.