Hysterical market needs to chill

  • Posted by
  • on October 10th, 2011

 

V type markets can be tough as they don’t let the “wrong side” traders out to breathe — when we went down the poor longs couldn’t get out on any bounce, and now the  shorts didn’t have a chance to cover as we ripped through the 50SMA.     These can be vicious markets for contra-type traders.

Perfect V in $SPY — looking for mini Ws to come next.

However, that being said we had 8 out of 9 alerts (all long) trigger today from our newsletter– often when that happens and we run out of alerts it also coincides with a consolidation period in the market.    V type moves never last — the healthiest thing for the market would be to enter a consolidation period near the 50SMA.    Any such basing would set up many new longs, while continued running would create a higher probablity of a sharp move down.

The information in this blog post represents my own opinions and does not contain a recommendation for any particular security or investment. I or my affiliates may hold positions or other interests in securities mentioned in the Blog, please see my Disclaimer page for my full disclaimer.

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