Bounce is a Bust

By | August 25, 2015

Today’s bounce was a bust.
The market gapped higher at the open and then began moving sideways in a narrow range with a downside bias. In the final hour of trading the selling picked up, accelerating into the close. All the major indices finished the day on their lows, with the S&P 500 and the NASDAQ having the added distinction of ending the session on yesterday’s sell-off low.
The kind of volatility seen over the last four trading days skews the daily momentum indicators and invalidates trend lines, removing short term technical context. It is always good advice not to try and catch a falling knife and, sometimes, it is just as prudent not to buy the reflex bounce.


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