Two weeks ago, I posted the following image :
It turns out, I was right, but played it wrong. Here’s where we are now :
I thought that the red candle (first arrow) would be continued all the way down to a new low, unfortunately so did everyone else, and instead we got a bounce back up. What it is all coming down to is a pattern that I saw, which unfortunately was too big for anyone to miss, and thus it didn’t play out :
Basically, sentiment turned so negative that everyone expected a crash down to the 900 levels before lunch-time. So, instead of a selloff on increasing volume, everyone sold off at the beginning, and that’s all she wrote. For now. In my view, we are now stuck in a “contrarian trap”. If sentiment goes positive, the market will fall. If sentiment goes negative, the market will rise. This is how it usually is – except during crash times, when negative sentiment fuels further selling, which fuels negative sentiment. During such periods, the market tends to oversell, just like it may well “overbuy” when in a bubble. What do I think will happen next? Well, I am guessing sidewards sludgy feeling, until we get a spike downwards. I’m positioned short (when have I NOT been short stocks? never, thats when), but I am willing to jump ship if necessary.