Markets did a nice reversal into the close and now the charts show a potential double top in the Nasdaq. I mentioned how the financials were lagging today which is always a warning sign about the sustainability of a rally, but I've also seen times were financials were weak through out the day only to turn strong by the end, therefore, I was in no mood to play the long side or the short side especially the latter given how crowded that trade appears to be.
There was huge amount of high fiving going on today with the bears. It's as if the market crashed back to the lows in March. I also saw a number of traders on twitter chase FAZ and SRS into the close holding overnight. How many times must they get whacked in the face with a shovel before these guys learn to respect the upside risk of the market? It's the definition of insanity. If you are bearish in the intermediate term, this is not the type of behavior you want to see. Such euphoric sentiment and for what? A reversal? What damage have the bears done to the market? Absolutely none.
I think the odds are quite high that this will turn out to be a bear trap and quite possibly a massive one. Markets can certainly go lower from here in the next couple of days but aside from perhaps any intraday trading opportunities I'm not joining the bears. When I see the market decline over 10% from it's highs with a series of lower higher and lower lows then I might be inclined to join the bears. Either that or some genuine panic buying or capitulation from the wrong way bears who have done nothing but lose money in the past 6 weeks.
Should be another interesting week or 2.
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