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As a general rule, strong trends do not immediately reverse. Rather, topping and bottoming is a process. Thus, even if we are indeed topping, I will hold off on adding any other insurance policies besides the $SDS (ultrashort S&P) that I bought earlier. I expect the 1150-1160 zone to act as a sturdy first level of support, and as I write this, eating fresh red grapes and drinking espresso, I see we have fashionably arrived in that zone already.
What you are looking to see is whether an abundance of stocks can hold their respective 20 and 50 day moving averages during this sell-off. The bulls have made a fair amount of progress over the past two months, and those rising moving averages will likely count for something. Today was the first strong showing for the bears in quite some time, but it is far from prima facie evidence of a reversal in trend.
If you are looking to get more aggressive on the short side, then a dead-cat bounce in the next day or two will be the smart entry point, as opposed to trying to pile on now. Similarly, if you are looking to buy the dips, today is merely the first day of correcting that we have seen.
In other words, go grab some red grapes and brew some Illy espresso instead of making hasty moves at this time.
eating red grapes.
Sucking on a clementine here
just threw a banana peel at a store clerk
The ol’ banana in the tail pipe eh’
http://www.youtube.com/watch?v=3sRhm3SsdHM
Thanks Chess as always. You are true Samurai with Zen spirit. I am learning a lot from you master.
Sitting on my hands.
Waiting patiently!
drinkin wine
hey where I’m landed , in a bar veranda ?
A much needed, well balanced article at a time when there is lot of insanity and overreaction in the blogosphere.
I crushed 3 boxes of ruby Cabernet grapes Sunday and presently they are in primary fermentation in a fresh sterilized garbage can I bought at Home Depot. I’d much rather crush grapes than eat them.
With regard to the market, I see a slight bounce which will be embraced by sellers driving everything into a ditch up to and past the elections.