Wednesday, April 11, 2012

Okay, we did the dead-cat bounce... now what?

Okay, we had the obligatory "dead-cat bounce" today, sort of, at least for some stocks, but now we are back to the question of follow-through. The bounce has zero-predictive value. My hunch is that the market will drift sideways for the next week, with equal probability of a sharper bounce or another sharp decline, neither of which will indicate the true medium-term trend. In short, it will take another week of this "screwing around" before we can get a feel for whether sentiment is still holding up or really beginning to fall apart.)
 
Besides sideways movement, the next two milestones are whether we set a new near-term high for the Dow or break down to more than a 5% decline from the recent high.

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