There seems to be no end to the selling, which means that we’re probably due for a bounce very soon. The VIX is flying high this week as the angst intensifies. We had huge volume today, so my guess is that we’ve probably reached a selling climax. I didn’t trust the attempted bounce today because it started too early in the day. I like the kind of days where the morning and early afternoon are just miserable. Those days tend to make the weak hand capitulate, then they rally into the close. That may happen tomorrow if only because conventional wisdom would say that nobody will be buying ahead of the weekend, especially not with the increased terrorist activity. But you won’t catch me trying to be a hero and buying tomorrow — except maybe to cover a couple of my shorts. In fact, given the way the indices are slicing through their lower Bollinger Bands (%b on the S&P 500 is -0.30), I wouldn’t expect more than a very weak bounce in the short term.
What do you call the candle formation with the little block at the top and the long tail beneath it?
If we see one of those tomorrow, it could be smooth sailing for the longs next week.
That’s my good buddy the HAMMER! (hammering out a bottom) That’s exactly what would be formed from the type of action I described.
Definitely looking forward to hammer time! Can’t presume it will be smooth sailing from there though. For example, if we gap up from a hammer, the market may try to fill that gap before resuming the bounce…
To Hammer or To Be Hammered?
Looks like both. First the hammering, then the hammer, followed by more hammering…