Still trying to stab at that bottom? Not a game I like to play. Frankly, taking a grab at falling knives has proven more dangerous than fun. This market is proving there is very little reason to step in and buy for any length of time longer than few hours, maybe a full day. So many want to get in on this very oversold market. Why? Just look at last August and October, or October 2014 where deep oversold conditions existed. Utilizing patience will serve you well.
Markets were so beaten up (as they are now) we saw huge slingshot rallies to the tune of 150-200 SPX 500 handles. Those were fast, sharp and most with gaps that did not give many a chance to get on board. Gap opens will mess with your mind, convincing you that buying is not the right thing to do – rather, wait for that perfect dip. This time around, you have probably vowed to yourself that you won’t miss it – and will be early, even if it means you’ll have pain prior to a big move up.
Well, as we know the market is never that convenient, friendly or accommodating. Instead, we have to go with our knowledge, experience and belief in where we see the next market move happening. Many will say market moves are identical, we cannot separate them into categories – fear and greed reign. This I do believe, however times are different as are circumstances, and while history may not repeat it can certainly rhyme.
Market conditions, Fed support and earnings growth are not inspiring money to come into the market quickly this time around. We’ll get that rally, oversold conditions are still off the charts bearish. Friday may have been the start of a rally, but let’s see some follow through first. But rather than listening/following the pundits, experts, fund managers and others say they are going in and buying this dip or that dip – let the market tell you what to do. It’s the only truth you will ever be told.