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Will July 4th Weekend Bring A Rally? Or Panic? Or Both?
Time for a context check.
There will be a bear market rally at some point. The beginning of a bear market rally never feels good--usually you're so sick of the downtrend that you want to puke up your stocks at the first sign of better prices. Are we close to that point? I don't know. I should mention that I didn't sell any of my short ETFs today, although I was tempted. What stopped me? The panic didn't seem panicky enough.
The market's been going down--almost straight down--for around a month now. Sentiment is terrible, and the word "bear" is being used more than the word "bottom." These are ingredients for a counter-trend bounce. Even a smallish bounce could cause shorts to cover, which would push stocks up quickly. The sharpest rallies, they say, occur in bear markets.
Traders want a big capitulation day (extreme selling) and a huge reversal (extreme buying) to signal a turn in the bearish trend. This type of volatility is measured by the Volatility Index, a.k.a. "the VIX", a.k.a. the "fear gauge."
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