More on Churning

Say the word "churning" about a broker and we've got a crook on our hands. A broker churns an account to generate commissions and little else.

Put that same word in a different context, and not even the butter one, and it means something different - and more positive. When the market churns it is unsettled. Bulls and bears are giving their strategies workouts and both win for a while. And then both lose, of course not a the same time.

The current market is churning about as both sides latch on to any nugget of information that suits their cause. Bears are in "see, it's not over" mode while bulls are in that "this time its the bottom" mode. The funny part is that neither side has to be right. The market can just stop as people get fed up an walk away. You won;t find CNBC on the tube at the barbershop and ESPN resumes its rightful place in the man cave.

Market volatility tells us that the bears have competition unlike it was when the market was falling daily. Market volatility tells us that psychology is changing as people become unsettled with their own views. A psychology shift is necessary to change a major trend so this is a good thing.

It is impossible for swing traders to live here. Day traders, have a blast. I'll even recommend occasional day trades to customers when I think the risk/reward is compelling - very compelling, that is.

And as I have written in my column, long-term traders can take a nibble here and there. I know I personally will take another bite on the next dip. As to what I will buy, well, stay tuned.