Mission accomplished?

Oh boys! This is really fast but hopefully not a surprise if you are reading my blog! As I said Thu that I was expecting a 100 points moonshot within days for S&P500 and here we are, within just a day, we have reached the goal (almost)!! The panicky selling at the opening on Thursday brought down S&P to 2856 and the closing price next day on Friday jumped to 2952, 4 points shy from my target. I guess you won't blame me to claim "Mission Accomplished", right? This is how a severe oversold condition can do for a quick and strong bounce. After all, it is just like a overstretched rubber band that will snap back swiftly at the end, unless it breaks. But most of the time it won't break at all. That's the beauty of being a contrarian to do what most of others are not doing. I know it is usually not felt so great for being lonely but often the best time by doing so (see an example here for Boeing).


Now the million dollar question is where the market is heading the next. I don't know for sure of course and actually I can argue for both ways as of now. You see, after such a forceful rebound, Mr. Market has used up a lot of his energy already and right now, it is sitting in a rather tricky position that allows him to swing literally either way with good reasons. S&P has just broken out above its 50 DMA (2942), for which bulls can claim a victory that can lead to further upward moves. But bears can easily argue that S&P may be just doing a suicide kissing! Indeed, as I have talked several times in the past year, the market has performed a few suicide kisses already often around the 50 DMA (see here for more details about the suicide kissing). 


So Mr. Market is playing a guessing game with us right now by wandering around its 50 DMA and let everyone guess what's his next direction. Here is my take for next week: if there is no negative news popping up during the weekend, we may see some further buying to push S&P towards 3000 or even 3020ish in the next week or so. But I won't count for much more than that. After all, it is still a "dead cat bounce" and we will see another leg down soon. Of if we are bombarded with new scary news again, then forget about further bouncing. We may start to head down again immediately. My own bias is a bit bullishness for the next few days, followed by more severe selloff later. Let's see how and where Mr. Market will lead us to!