It is always nerve-wracking when you get one bad reversal day off the top, since most market tops occur that way. However, today’s market action is very constructive. After yesterday’s higher-volume reversal day, our expectation was for the market to head lower for the next several days. Although the market opened lower this morning, it has reversed higher, while volume appears to be slightly lower versus yesterday’s. Overall, I view this as a positive expectation-breaker.

I mentioned in yesterday’s webinar that you need a strong day to negate the previous negative action, which is what we are seeing so far today.

Despite lightening up yesterday on a couple positions, my account has made back what I lost yesterday. This type of immediate rebound can give you confidence in your stock selection and your portfolio management rules. The market seems to be telling us to hang in there. Today’s close and tomorrow’s action needs to continue to confirm the strength of the initial rebound.

 

 Best returns,

 

Scott O’Neil

President

MarketSmith Incorporated

 

Follow Scott O'Neil at Twitter.com/WScottOneil