Fear of no fear

"If you look at CNBC now, there is a universal consensus that there will be no testing low anymore. As a contrarian I like this kind of one sided opinion as to me the chance of testing low is increasing now. Of course I’m not talking about something in a few days but I’m confident it’ll come in a few weeks time, especially when everyone talking about new highs! So far I’m happy with what I have: enjoying gains from my longs and having also shorts in place for surprising selloff. I don’t need to time the market for precision." This was the note I sent to my friends on Feb 26 when S&P was shooting up to 2775. The market was very hot then and it seemed a certainty that it would just go up to new highs. As I said last week, Market is the master of teasing and playing tricks to fool as many people as possible before it makes a severe strike. Even though my suicide kiss case appeared to have be negated, I just couldn't trust this market at the moment and I have been still very much in the campus of a low testing before we see new highs. Again, I certainly can be wrong and am fooled by the market as well for expecting this. However, I stick to my gun and play as such.

Today's severe selloff has brought the S&P below the 50 DMA again and is increasing the chance again for a low testing in the weeks ahead but I don't think we will see a straight line down as well. The current selloff  has caused enough oversold for now and the chance for a dead cat bounce is very likely tomorrow or if not, then early next week. If the market indeed bounces back in the next few days, don't be fooled with relief and start chasing high again. Its current 50 DMA is around 2736 which will be a logic bouncing target as its next major move. If so, it will create a bearish H&S and likely will mount another major plunge to kill as many traders as possible. Always remember, be afraid of no fear!

By the way, just another observation for fun: if you look at the chart I posted last week carefully (the upper chart with the today's chart below), you may notice that the immediate resistance for S&P was exactly about 2775. How precise the market is traded nowadays as it is totally controlled by the computer based on the important technical lines. So don't ignore the technical analysis, especially for traders!