Reply #14: false question

[selador]

the stock market has already dipped WELL off its highs, and down 7%+ in the week prior.

iow, it was oversold.

people always look for excuses for price action (fed etc.) but the reality of the market is NOT the news, it's the market's REACTION to the news. that's one of the first things you learn as a trader if you want to make money. the market can remain irrational longer than you can remain solvent with your opinion of what it should do.

most indicators (bullish percent), VIX, TRIN, COT reports, showed good probability of a bounce GIVEN an excuse/trigger. today, the fed was it.

remember also, that RALLIES ARE SHARPEST IN THE CONTEXT OF A BEAR MARKET

that's counterintuitive for many investors, and it's also what makes bear markets hard to trade for those with a mentality steeped in bull market dynamics.

on any given day, the stock market CAN crash. it's chaotic, dynamic and fractal in its nature.

but yes, a good general rule is - don't fade the fed.

the market has corrected. whether it will crash or not is beyond anybody's knowledge or control, despite what anybody thinks.

that's because emotion is the ultimate ruler of the markets in the short term - it's what makes it so eminently tradeable.

the dynamics of the overnight rally were a fair bit of speculative (new ) buying, but also a large %age of short covering. many of these were "new" shorts that AS USUAL tend to get short near the end of the downturn (retail traders trying to sell weakness). invariably they get stopped out which fuels more buying demand and creates an "ask vaccuum" in the thin premarket futures tape.

once the market opened, the classic "sell the gap up" began, which has been a solid moneymaker since well before christmas (i generally fade up gaps if they aren't pro gaps, but never has it been easier to do since this bear market started. iow, a higher win %age).

the market DID find support though (imagine that - support!!! in a bear market) at a 62% retrace which is the classic technician's line of demarcation between a buyable pullback, and a trend shift.

so, as we found a bid there, confidence came back in and WHAM - all the late shorts got crushed again

we did see a significant amount of initiative buying, and that's a sentiment thang totally.

in short, there is NOTHING the fed can do to SAVE the stock market from crashing. but given their news, they certainly prevented it from happening TODAY at least :)

market prattle mode - OFF