Curb Your Bearish Enthusiasm (For One Day)
We have a change in market sentiment. The sweet smell of fear is in the air. Let’s examine it a little more closely, shall we? We have a very strong bull move, which is running out of puff at the highs and failed to attract dip buyers where it should. Today we fell off the plate, accelerating to the downside. Expanded range close near the bottom.
This looks quite a bit more bearish that we should have expected in the circumstances (and don’t blame Eye-Rack! News can’t push the market unless it is ready to fall)
There is one fly in the bearish ointment and THIS is it. The high has not been retested yet.
Lets look back at previous tops for the last few years, you will see there has never been an interim top worth noting that has not been retested. Also you might note that in change of trend moves the retests tend to be VERY DEEP since they catch dip buyers unawares one last time. The overwhelming probability is for a retest. What that means is that bears will have a better chance to short, and quick longs will have one more chance to buy the fucking dip if they can get out quickly.
A straight shot to the downside is looking a little too obvious at this point. I suspect fuckery is afoot! Let us examine the market internals on a 5 min timeframe to see if institutional dip buyers are ready to save the day.
What we see here is fascinating. Clear lack of participation and narrowing of breadth at the highs. Wyckoff signs of weakness as the downmove kicked off. Yet for the second half of today we see more two sided price action. Market Breadth (ADD) started to rise, and TICK is painting a very small bullish divergence.
Find Scott’s conclusion below the fold:
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