Last Selling Wave

This looks like the final selling wave of the move.  The last selling wave is usually the sharpest and most panicky.  Last week's down moves were mostly contained and didn't scare anyone.  Monday hiked up the fear gauge another notch higher.  Now we're in the final wave of selling, which is when retail starts getting scared and puke out their positions.  I assumed that most of the selling would be done ahead of the Fed, and that post-Fed, there would be a rush back into risk assets.  Even with Powell meeting expectations and not signaling any surprises, stocks sold off anyway. 

Jerome Powell revealed as little as possible in the Fed statement and his press conference, basically confirming market expectations.  Obviously the crowd (including me) was set up expecting a bounce after the Fed, and the weak hands just dumped it seeing that they weren't getting that bounce. 

I underestimated the number of weak hands out there, and how popular dip buying has become.  Typical late cycle behavior, and I must admit, I have fallen a bit into that trap.  I am holding long, but its not a big position yet, and I don't really want to add more until we see some true panic.  It looks like Tuesday/Wednesday's small up move was just a dead cat bounce setting up and recharging for a move lower today and perhaps tomorrow.  That would probably set the stage for a more reliable bottom. The traders on CNBC don't seem concerned at all, which is troubling to see after 5 down days and a very weak 2 day bounce.  I wouldn't trust any rallies in the morning off this gap down. 

It looks like 10 year yields have found a ceiling in the 2.90% area, and will probably grind lower for the next 6-8 weeks.  I am bullish on bonds here. 

In one of those precarious positions where I believe the market will be higher in 2 weeks, but probably lower by Friday.  Thus, I will stick with an average sized long position and wait for a bigger down move to add.  There is some decent support at SPX 2680, but since we're so close to that level, they could blow right through to stronger support at 2650-2660 zone.  I will definitely add there.  Price target on the long is still 2790-2800 zone, but it probably will take longer than I expected to get there.