My dearest friends, let’s be honest with ourselves. We have a change in the trend.
While it has not happened yet, we are one day away from a confirmed series of lower highs and lower lows. While this is not a death-knell for the market, it does signal that the short-term trend is no longer up.
What you have witnessed is what I consider to be a classic start to a correction. We have a high-volume sell-off, and low volume over-sold bounce, and then more high-volume selling.
A week ago I wrote, “My crystal ball is saying that we will bounce and then have some volatility and consolidation.” Look for the volatility to continue. Once the volatility wanes, we’ll watch for consolidation.
Our first stop is at the 50 day moving average. Should we pierce it and trade beneath it for several days, our bearish brethren will emulate the Ursus americanus, meeting at the honey hole to fatten up after a long winter’s hibernation.
While the bears are rubbing the sleep from their eyes and sloughing off that disgusting fungus that grows on their paws during hibernation, I am listening to the sounds of the Atlantic Ocean and savoring the twinkling lights of fishing boats at sea.
As I gaze out over the balcony of this 3rd floor beach condo, my serenity will not be disturbed by the market. There is nothing like the beach to put things in perspective.
Blogging will be lighter than usual over the next three days.
We had similar conditions in mid-November didn’t we? High volume sell-off and a low volume bounce? Couldn’t his set up resolve the same way, namely another improbable moon shot?
Sure it could resolve in a moon shot.
The difference is, besides the clearly defined large volume sell off on this move, is the pattern. This is a clear case of big dumping by professionals, with an oversold bounce leading to more big dumping. The professionals are selling.
enjoy
Thanks. I am.
About the beach…you are correct…no matter which ocean.
not really mr pistil. i doubt our woodshedder would be so relaxed if the condo were in tripoli overlooking the white sands of libya. i think he’s way better off resting on the isle of palms off south carolina….
Lisa, you know too much about me. Although you are a tad off…Isle of Palms is not my style. Too much pastel and pasty white people from Yankee Land. Folly Beach is where its at and where I go…However, I’m at Virginia Beach now.
Enjoy the vacation.
Thanks Mr. Thaler. No vacay, just mixing a little pleasure with business.