"For two months, starting with the lows in August, I took pains to tell everyone the market was unplayable as we saw ridiculous moves both up and down in a matter of days. Markets were experiencing gaps every day to the upside or downside. Good news, bad news...you name it. It was tough. It was tough because when markets moved up quick, people wanted to be in. When markets moved down quick, they wanted to be short. All the markets provided during that time was nausea.
October 4th provided a high volume washout day where I stated that typically, you are going to rally off of. The rally was stunning in time and price. Instead of the market slowly working through resistance, within 5 days and a couple of gaps, the markets were back at resistance. They then sat around for a few days...a wild few days with gaps and reversals. We saw things like housing and financials actually put in what looked like good bottoms and then we had E day...on October 27th in which Europe supposedly solved their problems. Technically, it was a strong volume gap above resistance. Fast forward to yesterday. What happens? A rogue Corzine makes leveraged bets...just like the numbskulls did in 08 and kills the company he took over just over a year ago...leading others to ponder whether others are in the same position. We hear again that all may not be well in the big E. Markets give back a ton on Monday and we now walk back into a huge gap to the downside today.
I would love to tell you there is a template or a manual for all this...but there isn't. The fast money bails on the first sign of a problem...and jumps back on the first sign of relief.
If you put a crayon in the hand of your 2 year old and told him to draw a picture, that scribble would look like a lot of charts I am looking at as I watch the action today. European markets are moving up and down in one day enough for a normal year's gains or losses."
http://www.tradingmarkets.com/stocks/commentary/the-cuckoo-s-nest-1578737.html
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