I know I was a bit early trying to catch the falling knife in this selloff.  Risk management made the losses, um, well, manageable.

If you tried to catch the falling knife without a stop, but rather with small position size, that was also a good approach.  At least you knew if the risk went against you, it was not the end of your involvement.

If you exercised wild abandon and no risk management, shape up, learn from that mistake, or find another way to spend your money.  Yes, I mean you.

Friday seems like a really good indicator that, at least for a while, selling may have abated.

I am ready to charge out of the foxhole with significant position size risk, but as always, a plan to retreat and exit if the market does not hold last week’s lows.

Look at the following charts.

This first chart is the T2108 from Worden. It graphs the percentage of stocks above their 40 day moving averages.  We just hit a low that is as ugly as the throws from the crash of 2008-2009.  This chart is really a good tell that we are at some sort of inflection point, in the short term.

T2108 Bounce

This chart of the daily SP-500 shows the significant price and volume reversal to the upside, very bullish, on the daily SP 500.

SPX Bounce w Vol

Finally, the weekly SP-500 shows a bounce off the 200 week moving average and a reversal higher with pretty good volume.  This tells me the time has come to take this hill and charge without fear.

Get greedy when others are fearful, as the saying goes.

Of course, if this is a trap, I will live to fight another day, retreat, and maybe even go short again if the SP-500 weekly fails to hold the 200 period moving average.

Oh yeah, it is really risky, to hold substantial index short positions here.  The decision to get short again will come, when and if we see this bounce run out of steam.

SPX weekly bounce w vol

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