We have repeatedly inveighed about the dangerous volatility of this pattern. Yesterday the Dow fell to earth like a dead duck. Usually, of late, contrarians jump on an oversold condition, as this might be, and drive the price up sharply. Didn’t happen.
To repeat our recent admonitions this is not a situation for the casual long term investor. And maybe not for professionals. The agility and skills required to stay alive are talents possessed only by professional traders with resources unavailable to the investor. As we have occasionally said, this is naked knife wrestling. Don’t get caught in your pajamas.
While we think that the great bull market is still on we would view going to the sidelines as a prudent action. We will inform readers when we think it’s reasonable to reenter, and in the meantime cobble together coping strategies.
Following, the long view:
In short we are still dealing with an explosive alphabetagammazeta pattern which is producing false signals.