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Our wedgy is breaking again. Yesterday’s rally got the SPX above the bottom of the trend line, but the rally pooped out and it couldn’t close above it. Today we fell apart at the seams and closed on the lows going away. Horrible action, very bearish action. I received a few emails the other day asking me why I haven’t been long in a big way the last couple of days. This is why. Bear market rallies look good for a couple of days, but that’s all they are, bear market rallies.
In last nights post I said that I had seen this movie before. Many (traders) were on bended knee at the alter of hope only to be hit with a waffle iron.
These big rallies play games with your mind, it makes you buy even though its not right. Many people sold at the lows on Thursday (fear) and paid high prices yesterday (greed, missing out syndrome) and are now calling the suicide hotline. I try to avoid that silliness at all costs, even though I may miss a rally or two along the way. Remember that cash is a strategy and you don’t have to be ” in ” the market every minute. If you need action that bad go to the track.
If you have been on the chat room the last few days we are doing very well with some trades., mostly short. A bear flag/wedge may be reforming on the S&P again. One day at a time. I will see you tomorrow.
Joe