As we move towards the lows, I will likely start to lighten up on my short positions. Volume patterns don't predict a breakdown, at least not yet. While price and breadth were horrid today, volume wasn't all that heavy. Until we see more distribution, I won't go with a "breakdown of January lows" thesis.

From a technical perspective, this chart is a good example of a classic "dead cat bounce." We had a significant decline followed by a bounce that reached resistance on volume that was lower than during the distrubution phase, finalized by a sharp move down that completely wiped out the bounce gains in less than half the amount time. This is classic distribtuion phase action.
If we get early long side relief tomorrow, I will probably initiate more shorts based on the "retest January lows" thesis.
2 comments:
Did you get in on MA? It has retraced to the breakout-point @200.
The retracement is on higher volume. Keep an eye if it holds up at the 50d MA.
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