Oversold Bounce — Mean Reversion

We are entreated to a bounce this morning, one which I hope sticks. Breadth is strong at 80% and all of the small capped stocks are participating. This of course could go sideways and lower — should the weak hands being to flee via margin liquidations later on today.

But it’s important to remember something on bounce days. These are temporary respites. The party isn’t back and will not return for the balance of 2021. You might get a month, if you’re lucky, of 2020-early 2021 trading action. But rest assured, money should be allocated into old man stocks on days like today, slowly but surely, preparing for the fires that are undoubtedly coming — burning bright and furious — reducing portfolios across the nation to cinders.