Bears are feeling pretty good about themselves these days – and they have every right to. It has been a long time waiting for their day of reckoning, and it finally has arrived for them.
However, this isn't a time to throw caution to the wind.
The market has had a very nice leg down that has broken all of the long-term trend-lines that were in place previously, some dating back to March of 2009. With that said, I believe that the easy money has been made in the most recent wave down, and we should see some kind of bounce in the coming days from the bulls trying to fight their way back into the picture.
My belief is that any rally that the bulls put together will be futile in the long-term as it will only be met with bearish enthusiasm to short the rallies that come our way. As for me, I am looking for a retracement of roughly 4-5% before initiating any new short-swing trades. And believe me I have a list of them I am ready to take advantage of – but for right now patience is the name of the game, and as hard as it is for me, I must demonstrate that often overlooked, but totally necessary characteristic.
As you can see in the chart I am waiting for that retracement to the 50% to 61.8% Fib level that I believe, will be where the bulls lose their grip on things, and consequently we'll get an even bigger plunge than what we've seen already this month.
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