There are still simply too many concerns to overlook in the current condition of equities in order to get intermediate term bullish.
The first is the lack of a re-test of the August 16th low. This is not healthy and is a sign of an emotional low, not a structurally sound low.
The second is the continues lack of participation in this entire move higher from the Mid-August Low as it shown by the chart below.
The third is the very quick back to bullishness amongst market participants. It seems that everybody is expecting a strong rally here.
Fourth, the time frame we are currently in, as it usually leads to either a stall pattern in prices or weakness. While I do not expect a crash, the market could be setting up for an ugly October that may very well see a correction of 15-20%.
Fifth, the price pattern from the lows is most likely in counter trend fashion, which stipulates that the intermediate term trend remains down.
Now, all of these concerns could be rectified if the market is able to test the lows with ideally a 61.8% decline of this most recent rally, so any pullback here (and one does seem eminent) will tell us much about what is to come.
In the meantime, I remain 100% hedged on core positions, but I continue to look for short term trading opportunities on both the long and short side of stocks.
As usual we let the market tell us what it wants to do as it know about 100% more than us.
The first is the lack of a re-test of the August 16th low. This is not healthy and is a sign of an emotional low, not a structurally sound low.
The second is the continues lack of participation in this entire move higher from the Mid-August Low as it shown by the chart below.
The third is the very quick back to bullishness amongst market participants. It seems that everybody is expecting a strong rally here.
Fourth, the time frame we are currently in, as it usually leads to either a stall pattern in prices or weakness. While I do not expect a crash, the market could be setting up for an ugly October that may very well see a correction of 15-20%.
Fifth, the price pattern from the lows is most likely in counter trend fashion, which stipulates that the intermediate term trend remains down.
Now, all of these concerns could be rectified if the market is able to test the lows with ideally a 61.8% decline of this most recent rally, so any pullback here (and one does seem eminent) will tell us much about what is to come.
In the meantime, I remain 100% hedged on core positions, but I continue to look for short term trading opportunities on both the long and short side of stocks.
As usual we let the market tell us what it wants to do as it know about 100% more than us.
No comments:
Post a Comment