We're real close to a possible bounce in the market. Maybe as close as sometime tomorrow. But first I would expect the market to follow through to the downside a bit more. Preferably to the 50DMA. There are a few reason for this:
- Many leaders are at critical support areas.
- The market is not used to the market being down more then two weeks in a row.
- Many of the better short opportunities have either sold off to or nearing critical support.
- Many funds close out their years in October.
The market in the short run is nothing more then the collective buying and selling of all of its participants. Considering that most participants have now gotten used to a quick selloff followed by a rally and the day traders are eyeing the critical support areas for a bounce, it would not be surprising to see a reflex reaction, maybe in the next day or two. Preferably next week…more of rubber band effect.
If you're a long term oriented investor, be careful as the bounce will most likely be nothing more then a bull trap. But traders, load your weapons, you might just get a nice quick tradeable rally. But it will only last a few days to maybe two weeks.