Market Direction Intraday – It’s All About Put Selling The DIPS

Market Direction intraday continues to show that the trading presently is all about the dips. Every dip in the market direction since the end of December has been an opportunity to adjust positions, add to positions, do more Put Selling and then watch the markets continue to push higher.

The number of bears continues to grow and with that the market direction continues higher. The bears do not understand that at this point there is capital flowing in and that capital needs to be placed. Investors do not want to open their investment statements at month and quarter end to find 1% gains while market direction has moved higher. Fund managers world-wide are aware that the majority of them fail to even match the index gains. This constant inflow of capital along with the belief in the US economy getting better is pushing fund managers to keep pumping in their capital. The only way to do that successfully is on dips. Those are the dips I am busy watching and Put Selling against.

Market Direction and the 75%

Today 75% of all stocks within the US stock markets are being traded. In other words 75% of the volume are just shares changing hands. Despite what financial planners keep telling the average investor, buy and hold is in the minority and for good reason. Fund managers know that buy and hold will not meet their objectives of trying to at least match the performance of the indexes. They know the statistics are not on their side for beating the indexes and they are also aware that investors will jump among different funds to achieve better results. I have a friend who is a fund manager and at 39 his hair is white and he talks incessantly above retirement. The pressure to perform is enormous.

Market Direction and Watching The Dips

It’s the dips in market direction that are important at present. Below is the Market Direction chart for the S&P 500 intraday. I have marked in the market direction chart what to watch for.

The market direction opened up a little softer, tried a push back which failed and then:

A. The first wave of selling hit the market pushing market direction lower.

B. Following a little bit of buying the second wave of selling hit the market which again pushed market direction lower.

C. The third wave of selling pressured the market. By the third wave many smaller investors are worried and some will dump a few shares “just in case” the market direction will really fall. This remains a mistake but smaller investors are incredibly nervous people and the bigger investors know this. When the smaller investors dump their shares they are falling into the waiting hands of the bigger investors. From there the selling ends as they have obviously bought what they wanted for the morning and now the index moves higher.

Market Direction Intraday Jan 22 2013

Market Direction Intraday Jan 22 2013

This kind of market direction action is common in a bull market as the institutional and bigger investors manipulate stocks by selling a large quantity on mass to push down share valuation and shake out other investors. You would think by now that investors understand this and would step aside and let someone else get hurt, but that is never the case which is exactly why it goes on all the time. In a bear market the exact reverse occurs. The bigger investors will step in and buy a very large block of a certain stock to push the price up. Other investors watching, jump in and buy pushing it higher and sure enough the bigger investor is selling shares into the hands of the buyers. All he wanted was to get his shares out.

Market manipulation happens every day. You can reach my take on market manipulation through this link. Investors should understand that the stock market is small in comparison to the other asset markets such as bonds and commodities. The small size of the stock market makes manipulation of stocks easier which is why it is done all the time. There is no low against sell a large block of shares just to shake out other investors and then step back in and buy shares lower to juice the overall return. Small investors need to be aware of this and not get shaken out of their positions.

Market Direction Intraday Outlook And Strategy

The market direction outlook for he rest of the day is for markets to continue to grind higher here. Eventually the markets will take a rest but for now market direction remains solidly bullish.

I am using the dips to continue Put Selling my favorite stocks that are pushed too far down. The chance to put sell is at times very short but by having my watch list at the ready, I basically just need to glance to see the opportunities present themselves. Then it is just a matter of jumping in and Put Selling my way to continue profits.

Internal Market Direction Links

Market Timing Articles Index

How I Use Market Timing

Understanding Short-Term Signals

Various Market Timing Systems

Market Direction Candlestick Daily View (Members only)

Market Direction Portfolio Ongoing Trades (Members only)