February Did Not Happen

Looking at the indexes the month of February did not exists. The NASDAQ closed down .59% for the month, the SP up .10% and the Russell down .01%. Based upon the indexes nothing happened. Simply because the destination wasn't far off from the start doesn't invalidate the journey, however, and although the month ended flat the road was a little bumpy along the way. In 19 trading sessions on the SP there were 6 days with a close over close of greater than 1% and one of them had an intraday move of 2% from high to low. Volatility this month was considerably higher over last month which had only 1 day where there was an intraday move of 2% high to low. There was also a methodical uptrend for traders to take advantage of whereas this month has been overwhelmingly trend less.

SPX 1%/2% Days

As a mechanism of inflicting the most pain among the most participants, volatile sideways markets do just the trick. Early shorts and late longs can find themselves on the correct side of the market one day and on the incorrect side the next. From a swing trading perspective I know this can be an insufferable period so I continue to stand aside over all and avoid the psychological toll a vacillating market can cause. I did take a small position on the April 90 IWM put due to breadth extremes and a directional bias to the downside. I thought this was the most prudent way to position myself as my risk is defined and I have given myself time for this to play out without feeling on edge daily.   

A new month begins tomorrow and fresh capital is expected to roll in.  I'm still of the frame of mind that I'm not in sync with this market and am biding my time until enough buying steps in to give me a signal that a window of opportunity is open to trade.