Is the bottom here? Will we see a “V” shaped rebound? Depends on whether a person is in the state of greed or fear, the answer could be utterly different.
The truth is we really do not know where the bottom is. Any anticipatory move is purely a guess however the intelligent that guess might be.
Let’s review the state of market.
The DOW lost the support of 12000 for good. I was surprised to see how ease the support was broken last Friday. Even though the DOW has lost more than 3% of the week, it is not in the oversold state yet.
$VIX showed the same picture. When SP 500 put in the low of March, the $VIX was approaching 35.60. The $VIX was 22.87 last Friday.
Last week, we pointed out that the market could be a tug of the war between Tech and Market in general. The tech did not stand the chance of on-slaughter by the bears; it lost its 50 day MA. The good news is that the tech may merely enter into a trading range, and it is getting closer to its lower bound, so, if we go long, that is one of the areas to put in the money.
In general, a continued caution is still needed.
The limelight of the market has been shelt on the oil, dollar, Inflation and of course the source of all evils: financial and housing. During the weekend, we have seen some actions on the oil front, how much that could calm the market still remains to be seen. Certainly, at present level, the only help to maintain the oil price is the governmental interference. So, this is maybe the beginning of a long process to bring the price of oil down. Short term though, we may see still higher oil price.
Agribusiness is still enjoying the uptrend and may remain the same as long as inflation news alive. That is another area the bulls could put their money to work
Trading wise, it is hard to work full time and trade; especially in this kind of volatile environment. So, the stop order is important.
It is easy to follow the market trend than to go against it. Had we stick with our “short” position, we should have been in a better position.
It is good time to review those stocks that held well during this turbulence time. When the tread is reversed, those are the ones will be the high flyer.
