Merchants hit the promote button Tuesday when an echo of final month’s financial institution disaster reverberated via the market, and the tumbled -1.6%. And so continues the swinging pendulum of sentiment.

The factor about Tuesday’s banking headlines is these studies of huge outflows are previous information. This isn’t what is occurring now, however an post-mortem of what occurred final month. If somebody is freaking out over these headlines right this moment, they’re waaaaaaay late to the social gathering.

We want new and surprising headlines to interrupt this market, and as we discovered final month, bother at regional banks isn’t sufficient. If it was going to occur, it could have occurred.

The market likes to persuade us we’re fallacious moments earlier than proving us proper. As paradoxical because it appears, Tuesday’s massacre might truly grow to be very bullish if the market bounces over the subsequent few days. That’s as a result of this reflexive promoting is purging the final of the useless weight and clearing the way in which for the subsequent leg greater.

The bottom line is we have to bounce. With out that bounce, the promoting might feed on itself for a number of extra days and go additional. However with out new and significant headlines to transform assured bulls into fearful bears, the promoting will stall, and this dip gained’t flip into something greater than a routine step again on our method greater. At this level, 4,200 resistance continues to be very a lot on the desk.

Whereas I stay optimistic, this wave of promoting demonstrates why it’s higher to be slightly late than so much early. 4,200 continues to be very a lot within the playing cards, however there are zero causes to commit early and maintain a dip beneath 4,100. Savvy merchants don’t purchase dips, they purchase bounces. This can be a small however crucial distinction.

As I in Monday evening’s free weblog submit:

Whereas Bulls and bears love to position their bets forward of time, I like ready for the transfer to begin first. A pleasant bounce Tuesday would be the inexperienced mild to present this commerce a shot.

Because it turned out, Tuesday’s bounce by no means arrived, and I used to be left watching the massacre from the sidelines. Which wasn’t a foul place to be. Actually, Tuesday’s promoting works to my benefit as a result of it lets me get in at even decrease costs when the inevitable bounce lastly arrives.

Possibly we bounce Wednesday. Possibly it doesn’t occur till Thursday, Friday, and even subsequent week. However a bounce is coming as a result of it all the time does. However till then, the decrease we go now, the higher it’s for me.