The downtrend continues as the major indexes are forming a series of lower peaks and lower troughs. On the Monday and Tuesday of this week we came up from a lower trough only to form a lower peak as the Dow index turned down again. Hopefully readers didn’t get sucked back into the market on those strong up days of Monday and Tuesday. If you read my article on follow through days then you should have been waiting for the follow through day which occurs 4+ days from a recent low. The big rise on Tuesday was only day 2 from the low which should not have been bought. Subsequently the downtrend resumed and we are now making new lows again forming lower troughs…not good and on high volume again (Thursday was very high volume as the market fell). So the count for a follow through day 4+ days after a low, has been reset to zero and we can’t start counting up again until we come off the low.
Be happy that if you are in cash and the market is down 5-8% then you are beating the indexes by 5-8%. Also your powder is dry ready for the upturn when it comes. During these sell offs nobody can know where the bottom is and it sure feels good to be in cash.
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Well said. Flat is heck of better than negative 5-8% indeed. Have to say that the late day bounce is encouraging for next week though.
ReplyDeleteYes always nice to see a late day bounce but remember to wait for the follow through day. Don't want to get sucked in on a temporary bounce in a down trend.
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