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Here is an excerpt from our trading plan.
Bounce2 has launched
Yesterday we wrote:
"Tomorrow Tuesday is likely to be Turnaround Tuesday, and Bounce2 has a good chance of starting."
That's pretty much what happened today Tuesday. Bounce2 launched its first upward thrust, and it was a powerful launch. In fact, both S&P 500 and Nasdaq 100 E-mini futures have been up most of tonight. The odds are high that we will see a gap up at open tomorrow.
You may recall we wrote a lengthy weekend analysis to discuss all the market internal factors that were shouting "bullish" rather than "bearish". Combine them with the oversold conditions from May 3 to June 3, the extreme bearish sentiments and we have the equivalent of a nice pile of dry wood.
Along came the Fed this morning to light the match. Jerome Powell hinted at the possibility of rate cuts, and stocks took off while bonds fell.
We have been lately working with the assumption that the May sell-off is a Down Trend. We showed you the following table to highlight the Drop/Bounce sequence of this Down Trend so far.
These values are still valid. The questions to ask now are:
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