That post was written on the 26th September...
So what has happened during the last 3 weeks?....At last a decent unrestricted correction..... this time...the Dipsters acccumulating "cheap" shares in the dips + the Feds re-assurances failed to apply enough buy pressure to create an early arrest of this correction (and create another cry wolf with the correction indicators) thereby this correction has so far been allowed to continue towards its normal completion ....
Today we have seen the first upward move creating a "bottom"..The S&P500 closed at
1887 up 24 (1.30%).... So what now?....
Firstly I will mention this rare event,,,,,,,,,,a large slow moving Flash Crash, they ignore supports and resistances and all the others Laws..They have a predictable V shape behaviour .....
A healthy Bull market correction exhibit the same behavioural patterns (Laws) as Bear market cycles except the duration is much shorter term...
The Elliot wave discipline presumes this investor behaviour with 3 waves ...initial "worry" correction such as that the price is overbought. .. "relief" rally .... followed by an "uncertainty" correction, and so on as this investor behaviour cycle may repeat....repeated "uncertainty corrections can produce enough investor fear to create panic selling..
So Questions...
Has the Bull market Cycle ended? ...too early to tell.
Has the bull market correction ended?..too early to tell....This correction is 10% so far ..it's very possible it can be bigger than this...
Is it a flash crash with its acute V-shape recovery signature...too early to tell ...(easily busting the 1895 Fib and 1905/10 resistances are the first requirements)
Not much help..huh?...so how can we evaluate this situation?....
Remember corrections are mini-me bear cycles, so this present market should follow the behaviour as mentioned above...relief rallies in bear cycles are sucker rallies so beware..Why???..When traders find and enters a near bottom and ride the rally upwards they all have preplanned exit strategies..the most simple viewpoint for us Plebs is to remember how significantly important the Support and Resistance lines on a chart become..Therefore all eyes will be on that 1905/1910 resistance line...If the S&P500 fails to break through that resistance point, then the traders will be exiting here and take their quick profits as this is the only way for them to make profits in a bear cycle by using those Bear Market investing disciplines...
This of course makes for a self-fulifilling sucker rally prophesy and the Fundies are quick to argue this and that the market has then become irrational and running due to the technicals...During Bull market corrections however traders realise this all could be temporary,,but if there is any cyclic reversal doubts lingering in the groups sub-conscious then the traders may view this bull market cycle correction as a much longer event, at least until those doubts are extinguished..which could take many months or longer..
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