The SPY has broken below, and closed below our line in the sand, with conviction.
There may be a bounce tomorrow morning, but as far as I am concerned, the uptrend is over, and until we get a move higher with conviction that leaves this low behind, I expect lower prices.
The highs are getting lower, and lows are getting lower, that is a downtrend.
There will be bounces higher against the now predominant downtrend, but those will have to chew through all that supply of regretful stock holders who will be happy to unload more stock and keep the bounce in check. Until there are no more regretful stock holders, until there are more buyers than sellers, the price will not be able to make higher highs.
The best way to LOSE money in the market is to keep adding to losing positions. Only add to winning positions. The only exception is if you are holding a position in a long term portfolio. In that case, it makes sense to add at potential bottom after a correction has run it’s course.
We have not see this correction run it’s course, so for now, do not add to losing positions, keep your cash ready and be ready to invest another day.
Are you upset at being underwater? Perfectly understandable. You should use the next bounce to lighten up the losses, and keep the losses small. There is no way to know how low we will go.
We are now on the slope of hope. Hope is not a good strategy. Stay with the trend, which is now looking lower. Do you buy things in order to see their value erode? No way.
206.50 on the SPY is the important number to watch. If we bounce, and stay above that number, perhaps the uptrend will resume.
The market is now correcting.