An ugly day for stock market bulls on Wednesday as sellers hammer stocks lower. Fears over everything at this point are driving stocks lower. Tuesday’s follow-through day was shoved aside quickly all but ending this most recent rally. Failure will be complete if stocks take out the most recent lows. We will certainly see calls of a stock market crash as Futures are indicator another lower open. Will we fill finally see some real fear? It is anyone’s guess, but this market is signaling troubling waters ahead. Our stance has remained quite steady and have performed well. Avoiding and in some cases taking advantage of this downturn has helped tremendously. Our focus will continue to be on price and right now this market wants to continue its march lower.
In the AAII sentiment survey we saw a slight uptick in Bulls and those who are Neutral. Really, it is not a surprise given we did see the market rally. If this selling continues it will be interesting how the AAII survey closes out next week. Bulls ended the week at 23.2% up 1.5 percentage points. Bears ended the week at 44.8% down 3.3 percentage points. Those who responding as Neutral rose 1.8 percentage points to 32.0%. Still rather bearish even with the small rise prior to the survey close.
As Bonds continue to rally and the yield curve inverts it will certainly put a lot of pressure on the Federal Reserve Bank. I guess we cannot rule out an intervention prior to the next meeting. However, we cannot count on it bailing out the bulls. Let’s face facts a correction here isn’t always a bad thing. December 2018 most thought this market was on its knees ready to crater like 2008. We did not and had tremendous gains off the lows just after Christmas. While scary for most we stock with our process and triumphed. If you follow a sound process and Big Wave Trading, you too can be successful in this market.
Stay the course and be vigilant. This market is going to take some time to recover and resume an uptrend. No need to be a hero in this market environment.
