As expected the FTSE is rallying, there are simply too many bulls getting back into the market after the sell off. The market was oversold.
In the early stage of a bear market you get these powerful rallies each time the market is oversold because too many people are still bullish. It will take a massive and prolonged decline to turn those bulls into bears. This will happen in the next phase of the bear market sometime in the first quarter next year when the third wave of primary degree unfolds. Most people will always turn bearish when it’s too late, when the decline is well underway and downside is limited. This is why major bottoms occurs when there is a large proportion of bears.
Wall Street closed strong and the China manufacturing PMI gave a boost to the market. The decline ended ended at 5877. We went long near that level, and today we closed our long for a massive +255 pts. Add last week profit of 227 pts and we are up 482 pts in a week on the FTSE 100.
It’s hard to buy in a falling market, how many people have the courage to catch a falling knife? You need great judgment and confidence to do this.
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