The classic view is that you have to wait for either 2 things: 1. capitulation or 2. support holding and a rally. The problem with #1 is that capitulation is rare. There are many more bottoms than points of capitulation. The problem with #2 is that you don't get in near the lows and have to pay up after the rally already gets started.
For the current situation, traders have been conditioned to buy at current levels. This is the 3rd time that we are trading between 1040-1050. The last 2 times yielded 65 points and 90 points from bottom to top. It is very tempting to be a buyer here and wait for another rally. The problem is, most traders are thinking the same thing. I think we flush out the weak hands by going under SPX 1040, stay under for a day or two. From that point, I believe we can have a sustainable rally.
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According to your view maybe it makes sense to wait to buy. But does it make sense to hold a short position to catch the last bit?
how does 1000 on spx by august sound now...lol
took half of shorts from 1105 off today
I have rarely seen a reversal day on big gap down days that never trade above the open, with the previous 2 days being dojis, or consolidation days. Just following the highest probabilities. I will hold on to see how far the market can go down by the close, I will likely close at least half of my position by then, depending on the price action.
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