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Rubbernecking Is Dangerous in This Car Wreck of a Market

FOFL (Fear of Further Losses) not FOMO is the proper acronym right now.
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Traders were greatly relieved when the market finally bounced on Wednesday after several false starts. It was a classic bear market bounce with highly correlated action, strong breadth, and a sizable move.

But it didn't last long.

The bounce has completely reversed Thursday morning, and the S&P 500 is once again hovering around its lowest point of the year. Breadth is even more lopsided than Wednesday, but this time to the downside, with only about 850 gainers to 7,250 decliners. New lows are piling up again and are over 1,300.

While it is slightly surprising that the bounce tries failed so quickly and so completely, in view of the macroeconomic environment and the many uncertainties out there, it makes sense that market participants aren't feeling any great rush to buy this market. Not only is there a lack of FOMO, but the predominant emotion is fear of further losses.

As this one-day bounce makes abundantly clear, this is a market for trading and not investing. I've been beating this dead horse for a while now, but it is worth repeating -- there is no rush to build longer-term positions into the teeth of a bear market. There will be plenty of time to buy when market conditions improve.

It is understandable that short-term traders are looking for opportunities to trade the increased volatility, but that is a totally different game than long-term investing.

One of the big dangers of this market action is that it is difficult not to watch it. It is like the proverbial car wreck that you can't help but look at. There is often a feeling that we have to hurry and buy the great bargains that are being created, but it is dangerous to think of stocks as being "on sale" like consumer goods. Stocks are not necessarily great values just because they are selling at reduced prices.

I'm doing very little. I'm watching for another opportunity for a short-term index trade, but I do not see a great setup right now.

At the time of publication, Rev Shark had no positions in any securities mentioned.