Strong Follow Through From Yesterday's Bounce?

Markets are showing some resiliency, is it real or a fake out?

Markets of course started out on very weak footing on Wednesday opening well below the 200 day moving average (DMA) in SPX terms but quickly retraced back to flirting with that level for a while before rallying far above the 200 DMA. The SPX closed at 2644 and the 200 DMA today was 2591.

Following up on yesterday's post I offered a hunch that the market is in jeopardy of rolling over into something more serious. That guess was "right" for a little while early on Wednesday and then it was "wrong." I put right and wrong in quotes in that last sentence because I have no skin in the game for being right about a guess, my skin in the game, and yours too if you're an investor (as opposed to being a trader), is in sticking to the investment process I laid out as being the best path for clients.

There have not been two successive closes below the 200 DMA, I don't know when there will be but whenever that occurs I will take a small defensive step for clients; no hunches or second guesses, just process. I would be glad to see the market rally after taking a small defensive step, I am in no way hoping the market goes down a lot but want to prepare in case it does.

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