We have certainly been here before.
At various times since the March 2009-present cyclical bull market began, we have seen strong multi-week uptrends become very stretched to the upside. Eventually, a one or two-day selling event puts traders in a tough spot as to whether to position for a deeper correction, or instead the many V-shaped recoveries to fresh rally highs that so often has plagued bears the past few years. At some point or another, everyone has been wrong in this respect as to which sell-off would deepen, and which had already run its course before the bulls aggressively bought support.
With this in mind, having a well-defined strategy which defines risk on both shorts and longs–and sticking to it–makes sense. The real sin in the market is staying wrong, not being wrong in the first place. 1514 is still the upside level I am watching to see if bulls can recapture on the S&P 500, while a move below 1495 opens up a distinct possibility for a 5% correction or so.
It’s one thing to talk about staying nimble and open-minded here. I am all for being about it.
Wow – excellent oldie!
Spectacular song.