Respect the SMAs
I just wanted to point out how important the 20 and 50 day SMAs are. Trendlines and resistances/supports are just linear (easier) ways to visualize these. Look how the price action keeps it within a similar range of them. For a healthy market, it floats above and occasionally drops and bounces off of the 20dSMA when it gets to that overextended point that remains historically pretty consistent. Selling pressure can send it below, at which point the 50dSMA tends to catch it, and from there you usually see a sideways movement for a while before buying picks back up. The further apart the SMAs are, the more aggressive the correction tends to be. In moments where there is an existential crash in which these SMAs are irrelevant, the prices will quickly rebound back as soon as there is stability. May acted as the buffer period for the gap between the SMAs to close, at which point the 20dSMA was then overtaken. I remain bearish, but yes, this is bull market behavior.
What we've been seeing since the early June overextended correction is, in my opinion, buyers wearing themselves out like a hyperactive dog on a leash. This is what I'm fearing will spark capitulation, especially considering the economic fundamentals behind it. In this sense though, I don't believe there will be another crash like March unless it's triggered in the repo market, which tend to happen in the weeks approaching a quarter end (August/September bottleneck is next).
Whether it's psychological or just the way the algos work, either way it's been consistent as far back as I looked, so use it to your advantage.
What we've been seeing since the early June overextended correction is, in my opinion, buyers wearing themselves out like a hyperactive dog on a leash. This is what I'm fearing will spark capitulation, especially considering the economic fundamentals behind it. In this sense though, I don't believe there will be another crash like March unless it's triggered in the repo market, which tend to happen in the weeks approaching a quarter end (August/September bottleneck is next).
Whether it's psychological or just the way the algos work, either way it's been consistent as far back as I looked, so use it to your advantage.
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