Well, this has been, thus far, one of the most pathetic dead-cat-bounces we have witnessed. One of the problems is that there are just too many people stuck in positions that are deeply red and are waiting for some type of salvation rally to take them to break-even territory. The trade is just too crowded. Our guess is that investors will finally cry uncle and panic sell before we can finally reach any kind of meaningful bottom. This actually is the best case scenario -- gap-down, panic vertical move down, and then finally a tradable rally.
The next scenario is more painful -- a grind down with small intraday rallies that are constantly sold for weeks on end.
Either way, stay smart and wait for a meaningful reversal before going long. Never underestimate the power of the swing of the pendulum.
