The market came roaring out the gate on Tuesday and appeared poised to pick up where it left off last week. Alas, it reversed and gave back all of its gains and then some. Small caps once again led the way to the downside. My TNA position topped at around $80 and fell to as low as about $74.25 before retracing about a dollar above that. By contrast, the S&P 500 (SPXL) saw nowhere near the volatility.
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We have some larger than normal red candlesticks today, but they aren't as ugly as they seem given the large upside retracement. Still, the market was overdone and the downside may not be over. But how comfortable can the bears be? It's as though the market is daring them to go for it.
The OEX is neutral (smart money). The CBOE is bullish (dumb money), which is bearish, but this indicator has been mixed at best. Breadth fell, but remains quite bullish for now.
The bearish case is hardly compelling right now. Today's reversal could be the bulk of the downside we're going to get. It's as I've said, the selling could come from higher and it did. I am just not certain how much more we can expect, if any (short-term). Perhaps we chop around for a bit now. We'll just have to see.
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