Benjamin's Rule

This rule has been floating about in my head for a while, so after yesterday's action I thought it would be good to just get it out there and enshrine it as a maxim:

"Markets always go too far"

That is to so, they go too far upwards, they go too far downwards, especially nowadays when everyone is sitting there at their computers pressing buttons watching for the next breakout.

Yesterday I entered the day short and ended the day long. I was short going into the opening because of yesterday's very toppy action. I was thinking "this is it" and preparing to press my bets if things started really breaking down. Well once again I had to scramble around 10 am when it just looked like, well somebody just pressed a button somewhere and the charts started to spike. Actually the media reason is that some real estate piece of news (was it building permits? I forget) that was mildly better gave somebody an excuse to start pushing around the market. On low volume days that tends to be easier.



I see two scenarios here, and I don't have any idea which one will play out.

Either this is the beginning of a bear market market, or it ain't (genius, huh?)

If this is truly a bottom, would expect to see some downside testing for here, possibly in an inverting head/shoulders type pattern.

It this is the start of a nasty bear, then I would also expect downside testing, but support levels would eventually fail. Then watch out below.

I believe it's worth noting that approximately 80% of all stocks and sectors are still in terrible shape technically. That said, the leaders are starting to lead again, so I might start some stategic buying next week. I'm tired of the back and forth death by a thousand cuts type existence I am leading right now.