This bounce we’re getting isn’t at all unexpected – we were very oversold in the short-term. The question is how long can it can go on for and how long can it sustain itself. I thought with yesterday’s decline into the close, that we’d see more of the same possibly today, and instead, despite a bad jobless claims, we ramp up 1.3% on the S&P. It is absolutely possible that the selling over the last two weeks will go largely ignored and we’ll ramp to new highs yet again.
But I also believe there is a fair chance that we head straight back down and test recent lows and then move on to creating a possible ‘lower-low’ by breaking through 1340.
So my first instinct is to short this rally. Use it as an opportunity to reload – but slowly and not all at once. Bulls will feel a since of relief and perhaps inspiration that could allow them to keep pushing price higher, but there is no issue with testing the waters here and that’s what I’d encourage with the short setups below:
