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Was June 8 "It"?

06-24-2020

The market opened weaker, the apparent proximate cause appearing to be the increase in COVID-19 cases in Texas, California, etc. Whether that was really the case, it is impossible to say. However, it is possible that the action we've seen since the Nasdaq experienced a peak on June 8 with record volume indicates the functional top of a bear market rally (for reference, you can see what I wrote on June 9, quoting Milton Berg, who summed it up quite well).

Just Summit to Consider Despite the fact that the Nasdaq made another new high yesterday, neither of the other major indices have even come close. Thus, given the record volume, combined with the insane speculative behavior that we've been witnessing (even as the Dow/S&P have sort of labored), it is very possible that the rally has now ended and will be able to be labeled a failed rally.

I put on a few small short positions a couple of weeks ago and I actually stayed with them because I wanted to test this theory, and also because I didn't feel particularly threatened on them. Usually when the script doesn't work out as I expect, often because the stocks act way better than I think they should, I cut and run. However, that wasn't the case this time, which I think is potentially meaningful.

Treading Lightly I'm going to increase my short position slightly, but I'm not going to go hog wild unless we see more weakness. As everyone has seen, we have to give the tape a wide berth with so many powerful speculative forces still at work.

Turning back to the action, through midday the market was down in a lumpy fashion, with the Dow and S&P losing almost 1.5% compared to 1% for the Nasdaq. From there, the indices got more in sync, as they all lost over 2% on the day.

Away from stocks, green paper was stronger and the metals were quite volatile and mixed, with silver losing 2.5% while gold fell a few dollars. The miners were back and forth across unchanged a few times before they settled into the red for good, with most sustaining roughly 2% losses.