Market has established a volatile range here. Many stocks that were leading the action in last couple of months ago have gone in to range or correction mode. The growth stock leadership is now very narrow.
After a big up move from a August bottom a sideways range or correction at this stage will not be out of character. This market had one minor correction during November in this move. Market was up 10% or so since that correction.
On a day to day basis there is lot of volatility. This must be a dream market for day trader. Big moves happening on either side. News based plays and earnings plays have been making 20 to 40% moves in a day. If you are a dedicated day trader and not making a killing in such market then there is something wrong with your approach.
For swing traders there are not many big swing opportunities. Support buying, dip buying, pullback buying, and exhaustion kind of bounce methods are all working currently.But the profit potential is small.
Such corrections result in some stocks having orderly pullback or forming bases. That sets them for further breakouts when the market again has a breadth thrust. So this is the period for building watch-list of those kind of stocks.
For position traders also this is the time to start getting your method together. Position trades are best placed after market correction. That is why I would be emphasizing some of the position trading methods in next couple of week.