Futures are pointing to a higher open after yesterdays sharp pull back. As I pointed out in the chat room, in 2017 after almost every sharp one day pull back the market has found its footing the next session and moved higher. Today is no exception. But will the gains hold?
Over the last few years, just when the market looks its weakest, it looks ready to break, the price action reverses and within a short period of time we see new record highs.
Each sharp pull back has a little different feel to it, a different look, and usually has a different excuse as to why it's happening. But there lies the answer we are looking for... an excuse. I mused many years ago that until we get a sell off for NO REASON, this market will have every reason to head higher.
Yesterdays action mirrors that of almost every sell off we've seen in recent memory. The bulls get sobered up, the bears get a chance to puff out their chests. Rinse, repeat. In between throw in some sharp upside, and a lot of boring, watching paint dry type sideways consolidation.
The $QQQ came down to trendline support of the breakout wedge yesterday:
$IWM is back in the channel again:
and the VIX is getting its now almost weekly beatdown from the spike:
The more the story changes the more it stays the same... right? North Korea was Greece a few years ago. And Ebola, and Cyrpus, and the Sequester, and the Debt ceiling.
Perhaps it is different this time around. The market hasnt seen a 5% correction in an incredibly long time. But there is no rule that says the market has to correct 5% after a specific time. It seems just 1 % move lower is enough to keep both the bulls and bears on their toes.... for now. Until what works doesnt work anymore, stick with what has worked......
See you in the chat room.