“V” Shaped Bounces Can Be Very Dramatic But Short-Lived

It appears market participants were so desperate to find a bottom they’ve pushed this market beyond normal conditions and now find the market to be overbought.

Markets are always trying to find the equilibrium between buyers and sellers.  At the moment, we had swung so far down the market has to have a natural reaction to the move down.  Thus, we’ve created the “V” market bounce from new multi-year lows to counter balance the massive amount of selling we’ve seen this year.  “V” shaped bounces can be very dramatic, but short-lived.  They will always fail to produce “the” bottom unless there is a period of consolidation where you see the market under massive accumulation.  At any rate, today we are seeing the market move quickly into extreme overbought conditions which serves as a point of caution that this move is nearing its end.

As far as current leadership, John Ward posted an excellent article regarding the state of our current leadership.  It is leadership that will pull this market from its lows into a new bull market.  Without it, we simply just get Bear market bounces that do not last and who are lead by the old leaders.

Keep the market in perspective and let it dictate your moves.  Often, many try to impose their will on the market and for those unfortunate souls end up without their capital for the next bull market.

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