The market is at a very important juncture here as the S&P 500 has made a very big bounce right into the 50-day moving average. As I discussed in my prior post it makes sense that there be a pause at this point but the bigger and more important question is whether we see a trading range develop or will there be a continued effort to trend back to the recent highs.
I leave the predictions to people with big crystal balls and try to stay reactive to the price action instead. No one saw the sort of corrective action we had the last two weeks coming. Of course there were the usual assortment of bears but none of them predicted how this dip and bounce were going to play out.
The real question at this point is whether the market is going to now trade in a more normal fashion with some increased volatility and movement in both directions or will it revert to this manipulated one-way uptrend that so many bulls have grown used to?
The only way to find out is to watch how things trade. I think we are seeing a significant shift in the character of the market action but the market is always the final arbiter of such things. I stand ready to dance to whatever tune the market gods may decide upon.
This morning I did quite a bit of selling and took some index shorts but my quest for new buys continues. I added a little to Zogenix (ZGNX) and am waiting to see how things look into the close. If we close strong I'll be adding to things like Snap (SNAP) . If we close weak I'll be taking a more cautious approach.
Predictions are easy but it is action that counts. If the market doesn't want to rest then neither will I.