Monday, October 10, 2011

Hysterical Market Needs to Chill

V type markets can be tough as they don’t let the “wrong side” traders out to breathe — when we went down the poor longs couldn’t get out on any bounce, and now the  shorts didn’t have a chance to cover as we ripped through the 50SMA.     These can be vicious markets for contra-type traders.
Perfect V in $SPY — looking for mini Ws to come next.
However, that being said we had 8 out of 9 alerts (all long) trigger today from our newsletter– often when that happens and we run out of alerts it also coincides with a consolidation period in the market.    V type moves never last — the healthiest thing for the market would be to enter a consolidation period near the 50SMA.    Any such basing would set up many new longs, while continued running would create a higher probablity of a sharp move down.