OK, the market did what it had to short term, take out 12,000 and bounce hard. Now I believe we're going to get a 1 - 4 week rally ranging from 2 - 5% before the next leg down. We're in the last two weeks of quarter end, where news tend to be quieter ahead of earnings season. Of course there will be earnings warnings and economic data, but the market needs some relief after the volatility over the last 3 weeks, and a small relief rally would be just what the doctor ordered (a.k.a "Bear Trap").
Now having said all that, would I buy into the rally, NO. In fact, I would use the opportunity to move to almost 100% cash and wait for the opportunity to get short. If you're not a short seller then go back and review your trades from the bull market and prepare and keep a watch list for the next. Otherwise, you probably have a few weeks to take a breather.
Why am I so scared of the market, even if we get a follow through confirmation rally day? The politicians got involved in trying to calm us down. They seem to be trying too hard to tell us everything is ok. Not only domestic politicians but foreign one's. Now that's scary. I feel like something is about to give and global governments are holding on to the last fiber of a string about to snap. So prepare for more calming talk from the fed, white house, congress, and other foreign leaders. Then prepare to look out below if you buy into it.
Does this have to turn out to be some multi year bear market, absolutely not. Does it have to go further lower, yes. But as always, that's when the opportunities are the most plentiful and fruitful!!
If it were up to me, I'd love to see 10,000 on the DOW violated. That would set off a panic bottom worldwide!!! Good Luck.