We have been seeing false bottoms for the last 6 months. When we looked at it back in May, it was clear that these attempts at finding support can be very misleading (see the article here).
Now we are looking at a similar pattern playing out again and, even though we have seen it over and over, it is easy to get sucked in and potentially jump the gun.
Even one of the confirmation signals we look for has been faking us out. Just look at the VIX. Typically will rise as the market falls and even though it has cooled off, the overall trend is still up.
And we are still seeing the broader trend in tact in the SPY. The range of the trend as it drops is widening but we haven’t broken out to the upside just yet.
Yes, there is definitely the potential for this market to find a bottom, but after we have been faked out over and over lets all wait and be the second mouse to go for the cheese and let the others take the trap.
Lee Gettess has some great tools for confirming market exhaustion and his approach is a powerful way to make sure you don’t get duped. Check it out here.
Keep learning and trade wisely,
John Boyer
Editor
Market Wealth Daily
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