Dead Cat Bounce
Well, I got the re-test call correct. And now we are getting a dead cat bounce. I like this saying because it implies kicking a cat. That's funny if it's not your cat.
Why is this a dead cat bounce, or more properly sucker's rally? Take a look at what has done the worst the past few months, those across the board did very well today and were leaders in many cases. Even companies that are impaired, have no prospect for positive earnings surprises or have decimated balance sheets climbed double digit percentages in many cases.
Also note, we actually did break through the previous lows before computer programs and traders started piling in. Tomorrow there will be no computer assist and good traders will sell into strength.
Only some averaging into commodity linked issues and commodities themselves, and a small handful of value/growth plays make some sense.
Don't get sucked in. This rally will fizzle below the last one and be faster to fall again. My limits on SDS missed by ten cents (really, I was set at $14, and SDS got to 13.90 while I was at lunch) so I'm just going to hold them through this bounce. If I can sell a thing or two I have averaged down on, I will. By option expiration we'll be headed back down.