The hardest part of dealing with a bear market is selling weakness. At this point, we need to ensure a set of rules and a trading paradigm is in place that can allow one to contradict normal emotions and sell a market everyone else is looking to buy. For me today for example, I made money long...but made most of it short. But, from a day trading perspective...I needed to be much less impacted by the gap down and shallow bounce rather than focused on the expected counter-trend bounce back to yesterday's upper range that I would have preferred to see...It is quite possible that there will not be much of a bounce at all. However, I do believe that the dollar and the VIX will have a pullback for a few days next week before continuing their uptrends. We need to be ready to make the most of what ever the market serves - even if the bounce I think is reasonable to expect does not materialize.
"Psychologically, the steepness of the decline makes it harder for market participants to do the right thing and sell into the decline. The steepness of the decline also belies the underlying change of character seen at a change of Primary degree. If our analysis is correct, an important market juncture has been crossed...We suspect that people who are now waiting for a bounce or a pause to get on board this new trend will find that the train is leaving the station without them.
Again, the most important tactic now is not to miss this new long-term opportunity by using too much finesse and waiting for a bounce that never comes.
We believe is strong evidence in support of the conclusion that an important high has been seen." - Chris Carolan EWI
