Thursday, November 13, 2008

WHIPLASH REVERSAL DAY





One day after IBD signaled "market in correction" the broad markets reversed and handed anyone who was "short" a severe nosebleed. I escaped with a profit on my mhk trade but my ubb trade is in the red. The up probability for the S&P is 65% tomorrow.
Given the severity of this bear market I don't think many traders will go home "long the market" over the weekend and I predict another wild ride for tomorrow. So how many of my readers think the bottom is now in for this bear market?
Before you get too excited about today's market upsurge consider this:
On Oct. 10 the Russell 2000 made a new low for the move before closing with a bullish reversal. Then, 12 sessions later on Oct. 28, the index made another new low for the move, once again with a bullish reversal. Today, 12 sessions later--another low, another bullish reversal.
Such action is actually part of a bearish pattern. Lower lows and lower highs are classic bear market behavior or to use a very old cliche, til the Fat Lady Sneezes (or do they sing at the start of a new Bull market?)

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