Have we reached a tradeable bottom?

June 13, 2006 · Print This Article

How many times over the past few weeks have we heard the talking heads mention a tradeable bottom and how many times have they been wrong. I suppose if you say it long enough you have to be right eventually. Certainly, the probability to make a trade on the long side have increased significantly, but why be fooled two, three, four times, especially when you know important inflationary reports are due out over the coming days. Be patient.

With the mixed inflationary numbers this morning and the more important CPI out tomorrow, did traders really think after what the market has experienced over the past few weeks that traders would show any type of conviction. Sometimes staying on the sidelines and waiting for confirmation of a move is a wonderful thing, just ask the options traders whose trading accounts have been practically depleted over the past few weeks.

Tomorrow could be the big pop that everyone has been anticipating. Last month’s CPI led to big losses so your guess is as good as mine. It is how the market reponds throughout the day that should give us some much needed clues as to where we are headed – at least for the short-term. The question is how long will it last? If the Fed has indeed gone too far and the economy continues to slow down then we could be in for quite an intermediate move – to the downside.

RSI Wilder (5) for June 13, 2006