Until the Trend Changes, Keep Playing It

By now, every market veteran has been trained to throw out the old playbook and accept all bounces now turn into low volume, V shaped rallies. It is strange, as this was once a rare event, but now is the main method demonstrated in upward moves. Someday we might revert back to how the market worked pre 2009 but for 2 years now anyone who doubted V shaped moves was crushed the majority of the time.

While still not out of the woods – the market is now in it’s 3rd day of attempting the same old song. A week ago Monday I said the market would be overbought soon and we obviously worked that off with the 4 days of selling. What is curious is all the “go to” areas of the market were the ones slaughtered – the momo trades in commodities and leadership stocks (especially small caps) were the names hit the hardest. It would be atypical for speculators to run right back into the groups that were the most damaged, but the way this market acts, you have to be ready for anything.

For now we continue to sit over the S&P 1340 area which was the top of the three month range the market exited in late April. Other than a quick revisit intraday last Thursday we remain over that level – the next test is making a run at the highs of 1370 seen two weeks ago. Eventually expecting a low volume, V shape move to occur will blow up in people’s faces but for now Pavlov dogs rule.

In other news, kick the can continues globally as the rumors begin that Greece will get another bailout – because as we all know by now the way to treat debt is to hand out more debt. It worked like a charm 12 months for Greece (not), so let’s try it again. Can’t have those German, French, or British banks take any losses, so more handouts it is. I’m sure we’ll be having this same discussion in a year from now as well. Winning.

About Mark Hanna 542 Articles

Affiliation: Hanna Capital, LLC

Mark Hanna is President and Owner of Hanna Capital, LLC, a registered investment advisory firm. Mark has been a follower of markets since the late 80s, with a focus on individual equities since the mid 90s. He has been a well known commentator in the financial blogosphere for the past 5 years, following a career in corpoporate finance and accounting. Mark attended the University of Michigan where he graduated with a degree in Economics.

As an avid reader, Market Montage is the personal blogging site for Mark to share his views on economics, markets, and the like. Occasional cynicism and wit shall be deployed in his postings.

Follow Mark on Twitter @fundmyfund.

Visit: Market Montage

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