After gapping to the positive side the market drifted lower for much of the morning and into the afternoon. Durable Goods headline was better than expected, but underneath the report there were a few warning flags. We did see buying interest jump just after one in the afternoon. Buyers began to show up just as the Russell 2000 and gone into negative territory. The fierce rally continued into the close. It would not surprise us if this rally continues into the month end next Monday. While today was a nice rally and we are likely to see this market push higher it is highly unlikely this will be sustainable.
There is no shortage of cocky bulls “buying the dip.” We are skeptical if anyone was able to bottom tick this market today or even on Monday. Past history has shown when the market falls apart like it did Monday we eventually roll back over and retest the low. It is highly likely these dipsters will be selling what they bought on the dip. The Flash Crash of 2010 experienced 3 separate tests of the day’s lows before beginning a new uptrend. At the end of the day if we are to move higher we have plenty of time to get long this market. There is no need to be a hero.
From an end-of-day stand point it could be a few weeks before we get any sustainable rally. When you have complete and utter destruction like we have had over the past week it takes time to settle down. Those who exercise patience and avoid overtrading will come out on top when we do finally turn. We are going to be looking for stocks with outstanding relative strength and within solid bases. It takes time, but is very profitable for those who are patient.
We expect the current volatility to continue in the short-term. There are opportunities to make some intraday moves in the right ETFs. Our Platinum members know which ones are ripe to take advantage of. When this market does turn we will have a ton of opportunities to slaughter this market. Are you prepared?
