Market Monitor: Bearish
It looked like we will have 9 straight days of losses. We were heading for another 500 plus down day. Then the reflex bounce arrived. The turnaround was what I have been expecting for last few days. Lot of selling in last few weeks has resulted in washout in some sectors and this resulted in rebound. But it still ended up as down day. Again market has rebounded without reaching extreme levels on Market Monitor so any bounce which will develop has high probability of failure.
However this bounce might be playable to long side for nimble traders. Market is not out of trouble, so playing such moves means settling for small 5 to 10% profit targets. Willingness to cut losses short if things don't work. A focus on leading sectors is important. We know Energy and Medical are leading sectors and bulk of breakouts in that sector have higher probability of follow through than others. For extremely small duration traders oversold bounce might also work. But overall the move will be volatile and caution is the key word. For those with longer term holding horizon this market is not the market for building such positions as yet. Cash and sideline is the best strategy for them.
After few days of such bounce if the market fails then we will find good shorts also.