“Short term volatility is greatest at turning points and diminishes as a trend becomes established” George Soros

The markets (S&P 500 in particular) have seen more volatility recently and the million dollar question is “is the market topping out?” As always, we will only know the answer to that question in hindsight. For the last two weeks, my official outlook for the SPY has been neutral with the benefit of the doubt going to the bulls. This stance was determined by the volatility which has caused the 10 day MA to cross below the 20 day MA…a sign of indecision. Moving average crossovers represent a mixed trend picture, the short term (represented by 10dma) is lower while the intermediate term trend (represented by 20dma) is flat and the longer term trend (50dma) is still higher. I am not looking for the top here, I do not think the evidence is there yet. I am cautious though. You know that phrase “when in doubt, stay out”? Well, mixed trends tell me that it is either time to be on the sidelines (if you are a longer term investor) or to shorten your timeframes and exploit the volatility by trading long and short. I think that the current market enviornment is perfect for daytrading!

Andy Swan is also a big believer in the merits of daytrading, check out his interview on WALLSTRIP where he explains his new and exciting financial web project MYTRADE