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We have a soft open this morning, with most issues and sectors starting off in the red. After piercing the upper Bollinger Band last Friday, the most logical path for the S&P 500 would appear to be lower on a pullback. I locked in some quality gains on Friday, while ridding the portfolio of laggards into that big move higher. However, the market often defies expectations of reasonable traders, particularly during trending periods. In other words, a deeper pullback than a mere soft open is far from a given at this point.
Bull runs tend to be characterized by soft opens and strong closes, which is usually the sign of institutional buying and retail confusion. I gave you several long ideas that were not yet extended over the weekend here and other ideas for members inside 12631. In doing so, the strategy is to be prepared for the dip-buyers on the horizon making another go of it by the end of today’s session. Bear in mind, we corrected from 1333 down to 1300 on the S&P over the past two weeks. So, it is not as though we have gone straight up with no corrections at all.
The persistence of dip-buyers should never be underestimated during trending markets, due to the consistent success that they enjoy. It is only after they suffer several defeats should that they will consider throwing in the towel. Taking an objective look at the price action over the past several weeks and months, we are nowhere near a situation where the buy-on-the-dip crowd is likely to shy away.
yeah, have to agree….it would take some sort of significant negative surprise to turn things quickly.