- Ryan Mallory
November 9, 2007
Same news different bank. Wachovia Bank, Bank of America, and JP Morgan made it known that they were going to be today’s problem child. The market was so close to recovering from the losses earlier in the day. But in the last hour of trading, investors began to get a bit nervous and what you saw was another plunge downwards. The selling surge that is currently taking place is very extreme and appears to be unsustainable from a pure technical sense. Downturns in the economy tend to be more moderate in the sense that they do not happen all at once; rather they occur overtime and very subtle. Tops in the market do not announce themselves to the investor community, instead it comes as a thief in the night.
With the attitude of the bulls to always buy the dips, it would make sense that they will eventually stage a rally attempt; for the past year in dip has always been a reason to buy, and it is highly unlikely that they will give up without trying again. So expect an eventual attempt by the bulls to stage a rally attempt at doing just that. Whether it will succeed is anyone’s guess. When this rally occurs, we believe this will prove to be a good opportunity to fade the rally (terminology for going against the tide).