Is the correction over? Or is it the beginning of another 2008 bear?
These past couple of weeks have been quite volatile as the wrestling match continues between buyers and sellers. It is clear from the chart that the indices reached a major resistance level. These resistance points are where there is major overhead supply, meaning that many traders have held on selling when the price reaches their buypoint. Many investors who held on during the fall of 2008 are now seeing prices that are near their buypoint and are selling out.
I have always believed that this rally is a dead cat bounce and the risks of staying in equities without a real broad-based high volume rally are far too great. Markets need volume to break through overhead supply which this rally has lacked. Dead cat bounces don’t need volume, just a reluctance for people to sell.
Short term we are way oversold and I believe we could have a bounce to the 50 day moving average. I expect to see some strength after Friday’s impressive reversal. The markets have been seriously damaged technically and at that point when the markets approach the 50 day I would to sell and possibly short.