It is a market that overshoots. Both the upside and the downside. I got in early yesterday and am underwater on yesterday's longs, but I will hold on for the ride, since it is day 8 of the selloff and we have strong support underneath at SPX 2020. I like the risk reward at these levels, although I should have waited a day to get in. Another test of 2100 is in order as this market consolidates the huge up thrust, and with the derisking because of the Fed rate hike worries, it shouldn't last long as the Fed will likely be one and pause (for at least 2 meetings), which the market would rally huge on.
Don't be surprised if the Fed comes in with dovish words in the coming weeks to calm down the markets and give them room for flexibility in December. You have your classic Friday risk off trade today, and you can tell it is getting painful as the Nasdaq is taking a big hit, much more than the S&P. At the end of selloffs, the most beloved names are the ones that get taken out.
Crude oil continues its bear market, and I wouldn't touch it here. But any kind of dead cat bounce would be a huge boost for stocks.
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You should have had a little more conviction on a reversion to the mean scenario when we were at 2100. We all got blindsided by what happened in October of 2014. But they knew that and flipped the script.
Hard to be short in November. Lots of buyback activity and seasonally bullish. Those looking to short the rally have gotten for all of October and the first few days of November. It was not that easy to get short. It never is when the market is in a long term bull market.
Looks like we will hit 2000 before any bounce. Hopefully the Santa rally can begin by Thanksgiving. This market just tells you for the 5th or 6th time any time we are over 2100, get short.
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