Trading in stock market is not a science, however much we may try with our TA and other leading indicators. It is more about managing greed and fear and controlling emotions.
Today morning, SPX started at 1254. The futures were in positive territory before the start. But the relentless selling just continued as if the end of the world has been announced. Given that economic news was not that great either. Europe was getting sizzled with bond rates in Italy and Spain reaching new high.
On the other side of the pond, Mastercard reported excellent results and other tech. results have been above par. Debt ceiling issue has been resolved and although the economy is not in great shape, we have not seen the catalyst for the bear market yet.
But the mood was as bad as one could ever imagine. Everyone was enquiring if they should sell everything and be done with it. It was the burning smell of capitulation all around. That is when you know that we have a bottom. It is too much and too fast in the absence of any real negative event.
The SPX travelled all the way down to 1235 and came back up to close in green at 1260. It has travelled 44 points in all in the day. No mean feat. The market action does signify a reversal of some sorts. How long and how far it will go, remains to be seen.
I added to my longs and twitted about it. Just to show how oversold we are, I have borrowed the following chart from Philstockworld.
I am long term bearish but short term bullish. I think we are at the tipping point but will just hang on for few more weeks.
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