Market Direction From Here?

We are still only three trading days removed from last Thursday's unprecedented market crash and subsequent bounce, a move that can't help but reveal a technically and fundamentally flawed market that may be a precursor to an even larger move to the downside in the future. Volatility has increased and it will be interesting to see how the markets trade on Tuesday. After a huge move to the upside in the futures market overnight heading into Monday, we saw a relatively tight range of trading throughout the day session in the equities markets. Will volatility pick up again today?

There is so much uncertainty right now and for me I am going to observe the markets over the next day or two before trying to speculate how they will behave. Many traders I have spoken with are anxious to short this market. For that reason, I don't think it is going to be that easy. I am looking for whippy price action that will stop out all the anxious traders who are looking for the next big price move.

We have already seen a huge move to the upside after the trillion dollar bail-out package was announced in Europe. Is that going to be enough to curtail a falling Euro and worldwide economic uncertainty. I think it is more noise than anything else. It is a large number just thrown out to ease tensions in the short term. We'll see how it plays out, but I think eventually it will get uglier before it gets pretty.

So going into tomorrow I am looking to try and get on momentum trades if they materialize but primarily I will be looking to be in and out of trades relatively quickly. I will look for ping pong type range setups and plays off the moving averages. I will not be trying to predict any major market moves to the upside or downside because there is just too much uncertainty right now and the technical levels I have are suspect at best. I will continue to let the dust settle and I will only take trade setups if they materialize in a way that creates solid risk to reward. I will post updates as they materialize...