A sumo wrestler jumped and squashed the markets today. I was actually gone most of the afternoon getting my oil changed (long story). Anyway, I of course was watching the markets (with my blackberry and with CNBC at the dealership) and was watching the body slam in progress and I thought I need to rush back so I can be buying at the close. I thought through my portfolio and thought of a short I wanted to cover, a position I wanted to add to, and a new position I wanted to initiate, all based on fundamental analysis. So from a buying perspective I thought this might be giving me the opportunity and I rush back and get back to my desk at 2:45 and spent five minutes looking through everything and what I saw stunned me. There was no panic, this did not seem to be the whoosh I thought it was going to be. Volume was medium to light. The VIX was only up 12% and in the mid range of where it has been the last 9 months. There was nothing indicating the market was going to stop going down. So I did buy a little (if the market is down this much you have to buyer somehow) but scaled back my plans drastically. We could easily consolidate and move up a few hundred points but any meaningful bounce I think is going to be short termed. There was simply no apparent capitulation or panic that I saw.
This brings me to conversation I saw on CNBC. They were bemoaning the market going down and saying that now maybe since there seems to be so much pessimism that we were now ready to move up. This was another red flag that maybe we were still going to go down. A counter to this however was that the front page of CNBC headline was "Shorting Stocks Could Be Way To Play This Market." That is a bullish signal.
Does all this stuff mean anything? Not really but if you small and nimble (in other words you do not manage $1 billion) you should be able to pick your spots and I think your foolish at not looking for turns in the market. I initiated a new long position today but it was a very small initiation compared to what I was planning. I just do not think that today was the buying opportunity that it appeared to be on the surface.