Right now, price actions from both sides, the bull and the bear, are trapped in the Dead Zone.
There is only one thing to do- escape!
While the bull’s escape plan “almost” succeeded in breaking out from the past 2 days of furious digging; it was unfortunate that the tunnel collapsed today. The bear, meanwhile, has a better plan; it flooded the tunnel built by the bull and slide down the slippery mud with the help of gravity!
So far, the bear is in control; nevertheless, there is still a bit more to go before the bear breakout of the Dead Zone and fall off the sky. Yes, there is nothing the bear wants more than the feeling of free fall. And yes, that feeling can be quite addictive.
Below is the daily chart of SPY. From the look of it, who do you think will escape the Dead Zone first?
Needless to day, I added some more SKF and TZA today.
Currently 10% long-term hold; 6% short (SKF & TZA); and 84% cash.
ps. For those not familiar with the Dead Zone; it is my own personal interpretation of the range between last Friday high and Monday low which I considered a “consolidation” area with no bias on either up or down from an intermediate to long-term perspective.