The past couple of days’ trading action reminds me of scenes from old martial arts movies. The wise master teaches the young disciple to wait for the enemy to strike before counter striking. This seems like an easy concept, but extremely hard to execute.
If one’s timing is a split second off, one gets punched in the face. This is similar to the market during the past few days. Gap downs in an oversold market followed by reactionary pushes to end close to flat.
We seem to be wading into a long string of oversold stats. I do begin to wonder if we will have a gap up soon and a bounce that can last the entire day. But I will again be reactionary and see how tomorrow opens because how many times can we continue to fade an ugly opening without the market actually breaking down further. To make matters worse, the bounces have been so feeble in an already pretty oversold market.
If the SP500 closes below 1,075 on a daily basis, we maybe set up for more downside.
In slow August trading, sometimes it pays to be reactionary. Even though some big moves may be missed, it beats getting punched in the face.
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