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I was reading the comments on one of my favorite trading related blogs, www.slopeofhope.com, (a favorite more for the community of commenters than the excellent blog itself) and one of the comments struck a cord. It postulated that the market's recent rally from March had one characteristic in particular that might be repeated in this new down-leg. It is that there were few opportunities to 'buy the dips' before the bulk of it was over. And this bear leg may just have the opposite, where everyone waits for an opportunity to sell or sell short, and it doesn't appear for a long while..... it could.
Back to today, I am stunned at the strength of this selling. I was expecting a bounce to be a little stronger, and I find it hard to believe Friday's high is the next lower top, but now (at 10:40) that the low of last wk has been breached, it might be.... we'll know in the next bounce if these peak's will define the downtrend.
I don't think it will, ultimately. The rally off the lows in March started with a very steep climb, but the sustainable trend was defined later in the month at more reasonable rate of assent. If this bear leg does the same, then the rate of this first descent will moderate and the sustainable trend will be defined later, with a slower rate of descent.
Still waiting on 880-890, with a first bounce to ~900-910.
1 comment:
I think the steep descent scenario might be off the table already:
1). We spent 2 weeks creating a rounded top in the 930-960 range
2). We went from 945 to 903 then bounced hard to 927 before resuming the downtrend.
I expect a decent bounce from 880 to 915 to fill today's gap. If we slice straight through 880 this week, I'll be wrong.
But if you go back and look at bear market rallies lasting over a month, the decline rarely starts with a bang, they start slowly and then go down in a hurry. I cite Sept 01 to April 02 and March 08 to May 08 as examples. The rounded top of this one feels like those 2 rallies.
I'm a bear looking for S&P to finally bottom around 500.
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