The market finally gave us the long awaited pull back. But is this simply a pullback, or is it a major trend reversal? No one really knows until it has happened. The only thing one can do at the present is to identify price levels where buyers or sellers might exert their control. When these levels are reached, one can then assess the possible direction of the market based on the resulting price action.
As shown in the video, all the major market indices are still above their respective rising trend line. Until the price has broken through the supporting trend line, the benefit of the doubt still remains on the long side. Now that doesn’t mean one should go increase their long exposure, instead one should be defensive with tight stops to preserve unrealized gains and/or avoid excessive losses. One should refrain from shorting this market until it has confirmed the trend reversal. If this turns out to be a reversal, there will be many more opportunity to go short. The market will always humble those who try to outsmart the market. Be patient and be defensive.
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