Still Looking For A Rally

The ECB threw the market a bone by hinting that they are or will be buying bonds. As long as Europe does not completely spiral out of control I believe we are setting up for a bounce in the coming days. Hopefully, ECB buying will be enough to stabilize the situation.

The reason I believe we are set to bounce are as follows:

  • A down day today would make for 9 out of 10 down days. We are oversold.

  • We finally started to see extreme put buying yesterday.

  • Individual investors are now as bearish as they have been in a year according to the AAII survey released this morning.

  • We are seeing panic selling.

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