Buying The Dip?

As you recall, I wrote about a possible upside down head & shoulders developing and that the only way we would get there would be to sell off first.  I didn’t expect or want it to come in just two days.  But, we’re at the inflection point now.  We can afford a little lower on the Dow but basically 8500 would be the bottom for me.  If we hold that level, then we might see the market make another run back up.  We’ve also given back a little more than half of the gains from bottom to top.  So, we’re at the point where we SHOULD rally.  Now, we know that doesn’t mean we’re going to.  But, I don’t sense the panic out there from two weeks ago.  I just see aggressive selling on lighter volume.  The volume is weaker because many investors (and traders) are just sitting on the sidelines watching.  Nothing wrong with that.  You could also view this market as a range bound market.  We’re just bouncing around where you buy the dip and sell the rip. 

We have a big jobs report tomorrow.  I expect it to be awful.  Perhaps the market is pricing that in today.  But, if we rally off of those numbers, that’ll be very positive and constructive.  Today looks to be the 2nd consecutive 90% downside volume day.  Not exactly a weak pullback. 

It’s amazing how quickly things change.  Two days ago, there was an election day rally, charts were looking good, we hadn’t given up any gains.  Today, we have the two worst consecutive days since 1987.  We’ll see what tomorrow brings.  For now, I’m not buying the dip just yet.  Let’s see if the technical pattern I described above and a week ago plays out.

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