Whenever things seem the most certain, a trader knows they are extremely uncertain. Whenever things seem too one-sided, a good trader knows to take the opposite side. It does not even matter that he or she is the one doing the seeing. The trader has learned that the market is nothing more than a reflection of what the crowd is experiencing. And when the crowd has already experienced a great degree of pain and anguish, nothing, nothing at all, will look appealing. But oddly enough, that will be just when things are about to improve. Ugliness and sloppiness in the market can only be caused by those who have already sold. Get it? Already sold. Once the selling is over, once the darkness is complete, the buying part of the cycle is right around the corner. It's always darkest before the dawn. Whenever things look their worst, you are likely to be in the final hour of darkness. Never forget this simple fact.
Now having said that, am I calling for a market turn around. No. Technically, the S&P closed to indicate that we are, or could be, officially in a bear market. We'll watch carefully now for any signs of a fundamental turn around.
