Psychology Test

Recency bias is something that distorts human thinking.  We put more weight towards recent events.  Thus, the overshoot this year above 1120 in January and in March/April have traders thinking 1050 is a bargain.  You see, a 160 point discount from 1210 to 1050 seems like a much better deal than a 70 point discount from 1120 to 1050.  Even though the price is the same 1050.  Funny how we thought 1050 was expensive last September but think it is cheap in June when the charts look much worse now.

For today, I think we will continue our slide lower, we can have 1% rallies here and there, but I doubt we see those 3% bounces like the last 2 weeks.  Bounces will just delay the inevitable trip down to 1020.