Nu Sellers

The headlines are timely, aren't they?  Its almost as if the headlines were made to scare the public on the least liquid trading of the month, the day after Thanksgiving.  So much for that positive seasonality around Thanksgiving.  There are so many end of year rally bulls and seasonality "experts" who lose the forest for the trees.  

When you have so much complacency from truly excessive call buying, an overbought market that was 6 weeks from a V bottom, and in thin air above 4700, you are asking for trouble if you stay long.  Sure, you could get a nonstop grind higher like a December 2017 January 2018 move, but you can also get a move like today, an out of the blue massive gap down on a scary headline.  

Now I'm sure the bulls will say this is a black swan move, they couldn't predict that a new Covid variant would be coming and that the market would be going higher without the news.  If it wasn't the Nu variant, it would have been faster taper worries, or debt ceiling, or pre CPI jitters, etc.  Bad news comes around all the time.  Its just a matter if the market is looking for them and sell on it.  They usually don't.  This time, with the SPX in a vulnerable spot, they did.  

Its unfortunate that the headlines had to come out today, if it had just come out a day later, I would be loaded up on shorts and deep in the green.  I figured that they would keep the bears at bay on Black Friday, with the holiday cheer.  And would use that to my advantage to put on a big line of shorts.  Now what.  Its no man's land at 4620, not enough blood for me to buy the dip, but definitely not enough meat on the bone to try to chase it here with shorts and deal with a possible face ripper reversal (however unlikely I believe it to be).  So we wait, for that buy zone down towards 4560-4580, to BTFD.  Not rocket science, you have to stay out of the middle, and play at the top and bottom of the range, to minimize getting chopped up.  My paper napking charting below shows support just above the Sep. highs where dip buyers should come in to scoop up stocks on "sale".