Too late to Long, too early to Short? And Market overview for April 16

Another earnings release that beat estimates, this time JPM, early in the morning was setting up a 'sell the news' reaction. JPM actually traded down for a while but then quickly recovered to end the day positive. Unemployment claims number came in better than expected, however, the more important number in my opinion - the CONTINUING claims was at a record high. A record HIGH. Not sure how the economy is going to recover with so many people out of work.

Anyway, we started the day down, chopped around for a bit and then around 2:00pm the market marched straight up and we closed near the highs of the day. I took two trades: a long in SDS when the ES/SPY bounced from its VWAP at around 10:30am, and a short in SDS when the ES/SPY bounced from the daily pivot point around 11:00am. Both trades were scalped for 50c/60c and 35c. I closed my second trade quickly as I thought we were hitting resistance on ES, and going into lunch hour I felt we might drift lower. Boy was I wrong! The market just kept going higher and higher. This is an area of weakness for me and I definitely need to improve on letting winning trades run. Unfortunately, I had to run some errands and I missed a great signal to long the market again at around 2:15pm.

So, where are we now. It seems like we have been saying this for a while. It's too late to go long, yet it's too early to go short. So, what's one to do? Well, it depends on your style and trading plan. If you don't like to chase prices, then going long here might be risky. If you like to buy on a pullback, then you are still waiting because a pullback has not happened. If you are itching to short, I think you already know that it can be dangerous to your health. If you are a day trader, then it should NOT matter because your focus is what trend is developing DURING the day.

The only advice I can offer is to stay patient. Do not force a trade if it is not there and stick to your plan and rules of engagement. Let the trade come to you (or jump out at you when you see it). There is no need to force things, or try to catch a top, just like all those who got burned trying to catch a bottom just a month and half ago. We need the market to digest these gains and consolidate to see if we REALLY have hit a bottom. The only way is for a pullback and then a move back above to challenge and reclaim the 200MA.

Tomorrow we have C and GE announcing earnings and should provide some fireworks, along with options expirations Friday. I may take it easy on the trading (I usually do on expirations), unless a nice short opportunity presents itself.

I hope this helps. Good luck with your trading.