By now, every market veteran has been trained to throw out the old playbook and accept that all bounces now turn into low volume, V shaped rallies. It is strange, as this was once a rare event, but now is the main method demonstrated in upward moves. Someday we might revert back to how the market worked pre 2009 but for two years now anyone who doubted V shaped moves was crushed the majority of the time.
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While still not out of the woods - the market is now in its third day of attempting the same old song. A week ago Monday I said the market would be overbought soon, and we obviously worked that off with the four days of selling. What is curious is all the "go to" areas of the market were the ones slaughtered - the momo trades in commodities and leadership stocks (especially small caps) were the names hit the hardest. It would be atypical for speculators to run right back into the groups that were the most damaged, but the way this market acts, you have to be ready for anything.
For now we continue to sit over the S&P 1340 area which was the top of the three month range the market exited in late April. Other than a quick revisit intraday last Thursday we remain over that level - the next test is making a run at the highs of 1370 seen two weeks ago. Eventually expecting a low volume, V shape move to occur will blow up in people's faces but for now the Pavlov dogs rule.
In other news, kick the can continues globally as the rumors begin that Greece will get another bailout - because as we all know by now the way to treat debt is to hand out more debt. It worked like a charm for 12 months for Greece (not), so let's try it again. Can't have those German, French or British banks take any losses, so more handouts it is. I'm sure we'll be having this same discussion in a year from now as well. Winning.