This is how the market is supposed to do

"It always amazes me by seeing how fast people can change their mood and now I'm hearing people talking about new highs soon. Of course they could be right and I could be wrong but I do believe it is an illusion to think a straight line up to new highs after such a historically severe and fast correction. The market simply does not behave that way. Instead, it is always doing its best to try to fool as many people as possible into one direction and without warning it suddenly changes its course and scares everyone out of chair. I suspect we are going to see this sudden shock again". This was what I said shortly after the market crashed to its recent low in Feb. Since then the market has done an enormous job to fool people around several times. Two times in the past few weeks it decisively broke out through its 50 DMA, making a lot of people happily announcing the correction was finally over and we were on the way to challenge new highs soon. I even heard this kind of bullish talk today. After all, all the indexes had a great opening today to comfort those bulls. But the wheel fell off suddenly this afternoon and S&P closed at 2588. We are now having a retest of the Feb low against 2581. The question is whether the correction is finally over? I think we are close but not necessarily immediately done. Today's price action is utterly bearish, opening the strong possibility of another significant downdraft next Monday. On the daily chart, 2581 is an important support for S&P. If it can stand firmly on that and start to move up, then the chance is high that the correction may be behind us. If not, then it can easily test its Feb intraday low around 2530. If you are long by chasing highs recently, you need to pray over the weekend and keep your fingers crossed. The immediate future does not looks promising and could be ugly!


By the way, MU did have a great earnings report yesterday but it fell 8% today as expected. As I said, the key is not if it has a good earnings or not but whether it can surpass the super lofty outlook for the future. It was just beyond my understanding how people could keep chasing it after it was so much in the short-term bubble. My short term trade was to target it to drop down to $52 so that to give me up to 10 times gain. Unfortunately it "only" dropped to $54 and I closed it with a 4 times gain instead. Of course I'd be too greedy if still complaining! I think MU has some further room to go down, maybe towards 50. I like it for its long term outlook but be very cautious for its near term risk.