The volatility is at a record high, and for active traders, that can either be very good or very bad. Of course, for active traders, direction of the markets doesn't matter all that much because you can short stocks, currencies, ETFs, and also exercise calls and puts on options and so on. (actually the calls and puts part is a whole other can of worms altogether because they can be in the money one day, and out the next, thanks to the huge swings) Anyway, what makes the present market situation either very good or very bad what makes volatility such a double-edged sword – it'll make some systems brilliant and others useless. Sometimes technicals and their parameters seem to be the crystal ball everyone wants, and others that worked last week got shaken to bits. (lingo: shaken in and out of positions because of false or too-late signals) And there's no way of knowing ahead of time what parameters will suit the market conditions ahead of time, or what types of technical studies. There, as they say, lies the rub.

I've already mentioned trendlines, albeit very briefly in my backtesting article so long ago. They still have their value. Today a key support line that was tested three times in the major indices was breached, and now that “look out below” has already been hollered by everyone, I swear I can buy all of America with change and a pocketful of love, it's so undervalued.

....and so is oil. Economics 101: equilibrium price. Any good, service, derivative, commodity, stock, has an equilibrium price, where supply and demand are in perfect harmony. No one knows what that is, ever, really, otherwise stocks and commodities wouldn't trade up and down. However, in terms of oil, at 147, it was above any equilibrium price. At 49 dollars a barrel, it is way below. The world needs energy, and recession or not, people will still drive cars and use electricity.

Anyway... back to share prices. They tanked, again. And tanked fast indeed once they broke the “trendline” support level, because that's the nature of support and resistance lines when they, well, rupture. There's pressure behind that dam and when it breaks.....

Now back to the original topic: the way down in September and October were great for swing traders trading using MACDs or MA crossovers. The capitulation that followed was probably hell on wheels for every technical swing trader out there because of the constant signal-followed-by-stop-out nature of the market movements, as well as the sheer magnitude of the waves. Maybe oscillators set very (VERY) sensitive might have done okay in the weeks following October 10th's lows, possibly being able to pinpoint local tops and bottoms by being overbought/oversold, but almost no momentum indicators would have made money, until this past week.

The point is this.