The market bottomed on August 24th because shorts covered into the event, not before it...unlike this time...
Deja vu of August, Skynet lost control this week...The comparisons from August 21st (day prior to Flash Crash) to yesterday are compelling:
It was another gap and run day, in a rare series of gap down days. Both were monthly options expirations. Volume was almost identical (see below). The price range - 60 S&P points, was identical. The VIX closed at 28 on Aug. 21st, yesterday it closed at 27.
The main difference is that Wall Street covered ahead of the long weekend this time, as evidenced by the put/call ratio, the TRIN, three short-covering bounces (see below), and yesterday's close off the lows. In August, the market closed at the lows...
Since the market returned to the August 21st level (blue solid line), there have been three short-covering rallies, each of shorter duration, two of which failed, and one (yesterday) is TBD...
Double Death Cross: "Strong Buy"
The 200 dma is falling for the first time since 2011...
Death cross: 50 dma crosses the 200 dma:
The 200 dma is falling for the first time since 2011...
Death cross: 50 dma crosses the 200 dma:
Covering shorts at the beginning of a Third Wave, is not recommended...
