The good news: We managed a pretty good bounce after a big gap down to start the day. The bad news: The major indices are still in a downtrend, and all the bulls managed this week was to make us a bit less oversold.
After a big intraday reversal and a strong close last Friday, we were in pretty good shape for a bigger oversold bounce this week, but it wasn't very impressive action. We were particularly weak on Monday, then managed minor gains the rest of the week.
We'll see if the bulls can gain better traction next week. Our first failed bounce had a somewhat similar setup, with the market struggling to bounce for about eight days after the initial breakdown. We had one pretty good day on Feb. 2, then rolled over and sold off sharply two days later.
This time we have been trying to bounce for seven days, so far. We have made a little progress, but it has been tough going. Many believe it is just a matter of time before we roll over again, but the key to profits will be to time it right. Is another wave of selling just around the corner?
Keep in mind, downtrends will create a lot of new opportunities, especially, if you don't tie up your precious capital too quickly. There are some signs in the market action that suggest we have not put in a low, so stay defensive, or stay disciplined in the stocks you like....
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