The other day I mentioned (in comments) the similarity the present counter-trend rally off March '09 bottom has to the market's counter-trend rally from March - May 2008. Let's take a closer look at this.
Price action similarity — both in form and dimension seen in relation to respective preceding declines — is rather uncanny.
I wish it were easier to dig back through prior posts I have made. Many months ago I highlighted this very possibility that, a counter-trend rally off March '09 bottom might resemble the counter-trend rally off March '08 bottom. Anyone remember when this was? Over a brief period and on several occasions, I believe, I aired this view. I'm guessing somewhere in the April - June (2009) time frame, but it might have been even before that.
I also remember highlighting sometime late-2008 the probability that, were major indexes to return back to levels last seen the week Lehman Brothers took a dirt nap (September 2008) resistance was to be expected. Well, here we are.
And just to review... The reason I built my UltraShort ETF position from May - October '09 was because, first, nothing is set in stone — I was not about to pound the table per this like-from-like possibility I am highlighting once again today — and second, market action following the early-January '09 peak freaked me out (for lack of a better phrase) by how suddenly renewed selling set in once certain technical measures (NYSE and NASDAQ McClellan 5% and 10% Indexes in particular) had reached overbought territory. Furthermore, over the interim I was building my UltraShort ETF position a wealth of other technical measures were persistently diverging while major indexes continued to rise. This only served to confirm my bearish outlook (as still is the case today).
One thing I will say in conclusion. In all my twenty-five years closely following the stock market I have never stopped learning something new. I don't expect this will ever change...
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© The Risk Averse Alert — Advocating a patient, disciplined approach to stock market investing. Overriding objective is limiting financial risk. Minimizing investment capital loss is a priority.
Analysis centers on the stock market's path of least resistance. Long-term, this drives a simple strategy for safely investing a 401(k) for maximum profit. Intermediate-term, investing with stock index tracking-ETFs (both their long and short varieties) is advanced. Short-term, stock index options occasionally offer extraordinary profit opportunities when the stock market is moving along its projected path.
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