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Thursday, September 3, 2015

Is This the Bear Market?

 Is This the Bear Market..?

As I tweeted into Wednesday's close: the $VIX remains elevated and that means we're not out of the woods yet, and the question remains, is this the bear market we've been waiting for? There's a very good chance it is.

The action of the past 2 weeks is exactly what I would expect to see in a primary wave (C) or (E), whatever the case may be; you've all seen my long term charts. Either of those 2 real possibilities - P-(C) or (P-(E) - would make 2008 look mild in comparison.

I cut my teeth trading the bear market of '07 - '08, and I don't know if that qualifies me as a veteran trader, but it gives me a leg up on anyone who has only traded in a bull market, and as many all-nighters as I pulled back in those days, preparing detailed outlooks... You could say I got the crash course in technical analysis, because my members, and my livelihood depended on it. One of the most valuable lessons from that time was to learn that these things can't be rushed. All I can tell you is that we probably won't know if this is the Armageddon trade for some time.

The market action of late looks eerily similar to '07 - 08'. Crashes, followed by 1000 point rallies, followed by the bottom dropping out again.

I also don't like the fact that the NASDAQ rallied way too fast, and if this is only a snap-back rally in a bear market the market needs to take a breather here - in wave B.

If you follow my twitter feed you'll see me looking at the market from both sides (bullish/bearish), and when the action slows to a trickle as it often does, you'll see me charting very short term views - in some cases even 1 min charts -  but these short term charts are of little value unless you're nimble enough to trade intraday. Most small investors don't trade on margin, and it takes 3 days for cash trades to settle. If that describes you, don't get locked into a 3 day trade based on a 1 minute chart. If you're focused on the very short term you're liable to miss the forest through the trees.
Only trust the longer term - 60 min and Daily Candlestick Charts - until we're out of the woods.
I believe knowing when NOT to trade is as important as knowing when to put money to work.

Of course we have the Labor Day holiday coming up fast, and typically that brings lower volatility, and notoriously unpredictable trading. Maybe we see money put to work, since it didn't happen on the first of the month, and you typically don't short a dull market.

I have some awesome chart views we'll be watching this morning, so be sure to follow me on twitter!

Take Care and everybody have a great Labor Day weekend,
Anthony Allyn

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