10/12/2008

How to play the bounce

Yesterday was highest volume day in many Indexes and finally market ended positive. So There is a probability of a bounce here. We don't know whether this is bottom, but we do know probability of counter trend bounce is very high. Such bounces tend to be on Indexes or stocks or sectors which have had most oversold levels. This will be primarily a mean reversion kind of bounce.

The bottom 10 ETF in this list is what I am interested in for the bounce trade. ETF which are the farthest from their 40 day moving average are prime candidates for bounce.

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