A couple weeks ago, you could almost hear a collective sigh of relief as traders all across the land welcomed back their good friend volatility. For months now, active traders have been lamenting the nature of the action. We’ve seen long periods of flat intraday action punctuated by brief upside stabs, with very little of the sort of downside action that helps charts reset and develop more favorable entries.

While not pleasant for one’s daily P&L, the air pocket we hit two weeks ago is just the sort of action that could have led to some better entries, if it had only last for more than a day! The tendency to jump in quickly is understandable, particularly in this environment, and if you weren’t ready to immediately deploy some capital, then it’s likely you were frustrated by the immediate rebound that left the S&P 500 and Nasdaq at fresh record highs only 5 sessions later.

The business media might not notice, but it’s been a tough market to trade lately, particularly when the action has been dominated by a handful of big-cap tech-stocks while about half of small-caps languish under the respective 200-day moving averages. As easy as it might be to find reasons to be cautious, what’s worked is patience and an overriding respect for the pricing action.

Let’s take a look at some charts.



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At the time of this post, RevShark had no position in any of the stocks mentioned.

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