What a difference a day makes. Almost all the gains recorded on Wednesday were lost Thursday.  Also, one of the more daunting aspects is that oil prices were down, at one point going below $60. Dropping oil prices normally has been very bullish for the equity market, especially after the so-called reversal day on Wednesday. As I mentioned in my previous commentary, the market wants to probe the bottom.

As a trader, one of the more important lessons I have learned over the years is how expensive it is trying to grab the first or last dime on the table, that is, picking tops and bottoms. So lets be a little patient before we jump in on the long side. The market will let us know when it is ready to turn. We are still under selling pressure and I will play the trend and let the bottom pickers risk their money.

One of the weaker industry groups as of late has been Metals and Mining. Drilling down, I noticed Texas Industries (TXI) is ripe to continue its probing to the downside. We saw a small rally over the last few days on shrinking volume. If there is a violation of the lows from Thursday, I will be shorting.

Texas Industries (TXI)

If the position is filled please use stops! The market is extremely choppy and volatile so protecting your principle and profits are more important than ever.

Tom Incorvia is a swing trader with 18 years of experience in the financial markets.  E-mail him at tincorvia@gmail.com.