It surely doesn’t look good for the bears. The August low was briefly breached last week and it now looks like a bear trap. Actually at the time it already felt like a bear trap that’s why I stripped down my bear holdings to 20% and I vowed that I would be very conservative in adding back the bear shares.
But I was really hoping the market would do a relentless selling like it did back in July despite the price action, the inverted sentiments, and other technical indicators. Again, when was my wish ever granted by the market?! It’s been a week of strong rally with SPY up 11.35% in just 5 trading days, and the MACD clearly confirmed that the short term bottom is in, with positive divergence to boot!
Today the 50 day SMA and EMA were both tested and breached. It was supposed to be the major inflection point where I planned to stage a major add for my bear shares but it simply didn’t feel like a top today at all. Nevertheless, I added some and now I’m 40% in. The market is within striking distance from the upper trend line of the down wedge as well as the 200 day MA and it surely looks like it’s going to get there. With November fast approaching where the year-end Santa rally and the presidential cycle rally to gain force, I’m really starting to worry. The bears need a miracle. I’m counting on the magical Fib 76.4 retracement level at 119.73 and the nearby down trend line to hold the bull for a while and spare the bears from a major blood bath at the 200 day MA.
And the perennial mean reversion of my trading account is doing its thing again. Just as my portfolio value was approaching my multi-year average of $140K (it went as high as $139K) early last week, it has given back over $5,500 in the past week 😦
Portfolio Value: $133,3o0