I was stopped out of the USO United States Oil Fund LP long trade I mentioned yesterday. I think Murphy’s low applies here, what can go wrong will go wrong especially when it comes to picking spike bottoms.
Crude Oil has moved into an even deeper oversold region and it could still be forming an interim low, but for now I am going to stand aside from this one. The deflationary forces appear to be extremely strong and persistent now. This could mean that any bounces we do get are going to be weak and maybe not even worth playing as an upside bounce.
The stock market is breaking down badly today again. The bounce has not arrived as of yet but there are some volumes I will be looking at end of say on the SPDR S&P 500 ETF to see what it might tell us about any forthcoming bounce. I will do a follow up post on that specifically later on today.
I may take an entirely new approach to this bear trend partly because of the way the market is acting today. My latest thinking is that we could be in an environment the next 3 to 6 months that may be so persistently bearish that it will become very very difficult to re short on market spikes. It may be too difficult to time those because they may be too weak in nature.
We may be dealing with an extremely persistent newly bearish trend here that is the exact opposite of the bullish trend that existed from March 2009 to April 2010. But the difference is that bearish trends can be extremely and even more persistent than bullish trends because of the power of the emotion of fear. And they also can tend to move a lot faster.
So if you have a market that takes 5 steps down for every 1 step up, how will you get the chance to re short that market ? It will be very difficult to say the least. This is why I am hopeful that we get at least a meager bounce in the days ahead so that I may start a position trade on the short side and then just keep adding to it if possible on any new spikes up in the market. That may be the best way to play the bear trend especially if you are very bearish going into September 2010 of this year.
A very aggressive bounce from these levels would be a dream come true for the shorts. The question is can the market even get a medium sized bounce from here? So far I see 5 straight weekly declines in the market.
It still could be that the bounce is starting today, so far at least the volume on the SPY ETF is telling me so. More on that a bit later today.