I’m sure a good amount of traders are frustrated after this week because they got caught on the wrong side of the markets or they missed out on an opportunity to get short. The only thing that surprised me this week was the 2nd leg down on Thursday and even that wasn’t a big surprise to me. I was talking with a friend I’m coaching after he covered his positions on Wednesday, and his thoughts were that ”the markets couldn’t possibly go down any further.”
Given that I had moved to the sidelines I must have agreed, and after I thought more about it, I replied something to the effect that the markets would probably drop more because most traders were probably thinking just that same thought. It would have been to perfect for a rebound on Thursday, giving us all another chance to get short again.
I have no opinion on the major indexes at this time regarding where we go Monday, but I do know this. The bond trade is on, as this is one bullish chart that could challenge last year’s highs. We broke out of a range today and while I don’t often trade bonds, this looks like it should be bought on intraday pullbacks. Support is easily defined on this chart by the top trendline.
