The market has finally shown some signs that it may be ready to bounce, after failure to make lower low and forming possibly a double bottom. If that is indeed the case, it could close the gap and possibly retest the 125 area on the SPY.
While I know we’re officially in a bear market and that a new low is in the cards, I have no idea how the market would go there, especially given the recent volatility. Having missed the majority of the selloff, there is no way I would chase and be all in at this point. Therefore, I can only play with trend and holding on to the bear ETFs (1/4 position) and assume the market is consolidating instead of rebounding. If the market indeed rebounds, my plan is to add to my bear ETFs at various resistance point. The first is the bottom of the gap, which got retested today; as a result, I’ve added to my positions. The next add would be the top of the gap, the 20 and 50 MAs, and finally the 125 broken horizontal trend line.
It’s hard to see my positions go from green to red, which happened today. And if the market continues to rebound, it would get redder and positions larger. In other words, the pain and tribulation that I was afraid of may be about to begin. But this is the only way I know to reap the eventual reward in the end. No pain, no gain. I either reap small rewards now and possibly miss the big payoff, or inflict much pains, build up larger positions, and wait for the pay day. I choose the latter.