We are at a point in the markets where it seems that the line of least resistance is now down.But having said that, it is till not clear if we wont just turn around and go higher, perhaps only for a bear flag and continued rapid downside movement. But right now it is extremely difficult to enter new positions,because there is no real edge on both sides. Entering a long position now would be dangerous and the odds dont favour doing that. But entering a short position after such a significant selloff seems also very risky,because we have often seen that the market rallied sharply when most of the “dumb money” thought it would be a sure bet to short the market.
In my opinion the best way to play it is to sit on the sidelines or play the market on the 1min timeframe for now,as long as we don’t get out of the range we are in. An exception from this are markets which are moving independently from the major markets at the moment. But those are extremely difficult to find because most of the markets move in lock step with each other or contrary to each other. We see this in the movement of the s&p and the dollar and lots of other pairs. Trading individual stocks wich were setting up on the long side or the short side has been pretty difficult lately,because trend following doesn’t work in a trendless environment like this. But as a trend trader i don’t change my strategy to mean-reversion trading now,i rather wait for a trend to develop.