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Bounce or Bottom ?


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#1 NAV

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Posted 09 February 2018 - 10:24 PM

When we were trading at the 200 MA i posted that it's a "must hold" area or the decline morphs into a primary degree. Lo and behold, the bounce came exactly there. Do not confuse bounces with a bottom that produces a sustainable rally, no matter how big it is. Recall how the 120 point plus rally in SPX fizzled out a couple of days back ? It was a no brainer to spot a bounce coming off the 200 MA, but it is still not in a configuration to produce a sustainable rally at this point. My swing signals remain in a bearish configuration. I am still looking to short as far as the swing trades are concerned. SPX 2620-50 area is where i would initiate my swing short again. If the market rallies above 2650 and holds, then maybe we did put in a "bottom" today for a multi-day trade. I can only make that assessment on Monday.

 

It's too early to call this a bottom. Multiple retests of 200 MA is not uncommon.

 

But write this down. If we break below the 200 MA and drop another 50 to 100 points, this will not be your plain bull market correction. This will morph into a full blown bear market. More later...


"It's not the knowing that is difficult, but the doing"

 

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#2 NAV

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Posted 09 February 2018 - 10:37 PM

The NYSE MCO did produce a divergence today, as i had noted in my earlier post. If we get a breadth thrust on Monday and rally above 2650, then a multi-day rally is upon us. If we get rejected in the 2630-50 area with a negative breadth, then kiss this market a goodbye. That's the bottomline. 

 

It was a very profitable and hectic week. Enjoy your weekend !


"It's not the knowing that is difficult, but the doing"

 

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#3 Waver

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Posted 09 February 2018 - 10:52 PM

No Doubt

#4 jjc

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Posted 10 February 2018 - 01:34 PM

"Multiple retests of 200 MA is not uncommon"

 

3 breaches typical but by no means required. 


Edited by jjc, 10 February 2018 - 01:34 PM.