FORECAST: CHOPPY SEAS FOR THE REMAINDER OF AUGUST
We're washed out for the remainder of the August. Too many traders and investors have caught onto the bear side of the equation. It's gonna take some sideways chop, with a bullish slant, to shake loose some of the bearish convictions.
Chop chop ahead. The guy with the cucumbers looks scared here.
This is a market where attitudes and emotions seem to flip on a dime. Therefore, I wouldn't be surprised to see a couple weeks of sideways chop, with perhaps a push up to 1230-1240 on the upside being the max for the bulls. Bears won't get anything less than 1170-1180. A fairly narrow range to close out the summer trading season.
September is going to be another story, however. I'll have the reasons why later.
It may look something like this. Nonsense trading, in other words.
click on chart to enlarge
SPY
Keep in mind that as the chop progresses so will the comfort in the market. We need some level of comfort to clear the way for the next leg down which should take place in September. You can't have an abundance of frightened longs and eager short sellers pressing into declines like we saw today. You know what happens when they press? Just look at the intra-day chart for today. You get a reversal of the trend towards the end of the day.
S&P 500 5 minute
Those so inclined will have plenty of opportunity to position themselves properly for a break of the recent lows. My plan remains the same: Increase short positions via inverse ETFs and exit a majority if not all long exposure.
