Human nature is very consistent – pain is the ultimate motivator for change, and a 20% market swoon in under three months has most tactical and historical indicators suggesting extreme pain. The policy error by the Fed and chaos in Washington has created a historic decline in equities that makes human nature more important than any other factor. Obviously, oversold can become more oversold in a panic-based market environment, which is why we have argued that you only know it is time for a sustainable move higher following a sharp decline when our rally requirement indicators flash a buy. Until then, any bounce is likely to be sold as the market should again go through another bottoming process with a retest.

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