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Tuesday, May 22, 2012

Get ready for a short-term bounce

I have been extremely busy lately with travelling and heavy workload, therefore no time to sit and write here. Just a quick comment on the current market status. The overall market has been kind of oversold to quite some extent and is due for a significant bouncing rally. There may be still some decline in a day or two but I don't believe it will be severe. Likely following an exhaustive selling, a strong but short-term rally will ensue with a 5-8% jump in the next few weeks. Of course I also don't think this round of correction is completed. We likely will see another leg down below the current low to finish this correction and then we are ready for a more sustained rally towards the year end.

If you bought VIX or related stuff to bet for a market drop in the past 2 weeks as I suggested, you should be happy to have a nice quick profit. I think it will be wise to take the opportunity of a weak market in the next one or two days to cash out your profit. If the market indeed bounces back strongly, your profit will be wiped out quickly.

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