Most technicians will look at today’s oversold technical indicators and suggest that the market is ready for a strong bounce. If not an all out market rally.
And they might be right. Last week’s sell-off was marked by a number of inconsistencies. For instance, a number of down gaps leading all the way up to 17,500 on the Dow. Suggesting that the market will experience a strong bounce sometime in the near future.
A fairly good technical overview of today’s oversold conditions and what that means can be found here…..
Yes, the Stock Market Will Crash, but Only After This Brief Rally
But here is what I find interesting. Despite the bloodbath last week, and contrary to some of the indicators above, very few people are panicking. And while this is anecdotal at best, everyone I know expect this market to recover and then push to new highs. You can say that the “Buy The Dip” mentality is very well entrenched.
My question is………what if the market is not done selling off?
And while we will certainly get a bounce in the near future, any such bounce might be short lived or not what most investors would expect. And considering today’s investor complacency, it might take another move to the downside, to the tune of 1,000+ point on the Dow, before investors see today’s market in a different light.
Of course, this is just another view point to consider.
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