WHEN IN DOUBT...GET OUT!

This is an old Wall Street saying. I'm not suggesting we get out of the market, but it was one of the first thoughts that came into my head after the market close today. I told you yesterday that I was a little worried about the rally yesterday. Today I know why. We almost totally reversed the gains from yesterday. We are again watching the support level of the S&P 500 (at 880) to see if it holds. The sideways action of the market is nothing new for this time of year. The market often moves sideways or sells off in May and June. What worries me is that I am seeing a lot of bullish ABC patterns, but I am finding it hard to trust them. When I look at the reward to risk of being long in this market, it often looks like more risk than reward. I have done some things to mitigate that risk...like reduce the number of positions, buy smaller amounts, and trade shorter time frames (I have been recommending these strategies for weeks), but I feel like there is a big sell off coming...and today's movement only increased that belief. The VIX has moved back down to historically normal levels, but the market seems to be resisting any significant moves higher. Now I know that I can be a schizophrenic trader during sideways trends...that has kind of played out in some of the blog posts...but I do feel that if you just want to sit on the sidelines for a while, that might not be such a bad idea. I find that I can sometimes work twice as hard, during sideways trends, and make half as much money (or even lose money). This would be a great time to go on a vacation and get some good use out of the money that you have made. I will still continue to do some trades and I will post patterns when I feel they can make money...I just wanted some of you to know that it is okay to sit out a few weeks if you don't feel comfortable with the risk. I will try to post some longer term patterns tomorrow...possibly during the trading day. I also had a request to post my daily routine. I really don't have a well organized daily routine, but I will post some of the things I do on a regular basis. I will try to get that posted tomorrow or Friday. For those that want to keep trading...stick to those bullish patterns that I have mentioned over the last few days. Either wait for confirmation, or watch those support levels to see if they are broken. Keep an eye on UNG. I've talked a lot about natural gas lately. There has been huge volume lately on this ETF...much higher than normal. I also like XTO. UNH is a stock that I mentioned last week. There has been a lot of unusual option activity on this stock for over a week now. I love the pattern, so there might be something about to happen.