Today's selloff felt very different than previous selloffs we saw thru out the one year rally. I am not sure what it is but i feel like most traders turned very pessimistic with the Dow Jones/SPX only down 3% off their highs. The spikes in the VIX have been enormous. I am not sure what it is but this selloff 'feels' different to me. I personally think that the selloff has a little more to go to the downside before a tradeable bottom can be played but we will see smaller bounces along the way surely.
These are truly fascinating times in the life of a trader. Times like these is how trading becomes an art and less of a science. Trading markets is a very dynamic business. It is always changing and no one strategy stands to succeed for ever. One always needs to be evaluating and reevaluating his strategies and looking to adapt to current market action.
There is still room to go to the downside before we see a true flush out takes place in my opinion. There will be bounces strong and not so strong along the way surely. Gotta be very nimble.
You will see the VIX chart which is a good measure of fear in the market place. You can see how fear ramped up quite a bit in the past few days with the indexes are only down about 3% off their highs. This is very fascinating to me because usually this kind of spikes in fear and negativity is seen near market bottoms(not tops).
You will also see a chart of the UUP(US dollar index) and as you will see it broke out today and technically when US dollar rallies like this, then this will put pressure on commodities. Commodity stocks have been laggards thru out the entire rally pretty much as TECH stocks, Small caps and Transports lead this rally higher. Personally, i think the US dollar will continue to gain strength especially given the European troubles.
These are truly interesting times!!Will the bear market resume? Will this be another buying opportunity like the one we saw in Febuary?
I DO NOT KNOW.
All i know is: The nimble trader wins!