The market continues to trade in a choppy, sideways mess that is wreaking havoc on both bulls and bears. SPY needs to get back above 280 to get back into a Stage 2 uptrend. Until then we are in Stage 3 (click here to see on the Stage Analysis Screener) which means we are waiting to see if the market will resume the Stage 2 uptrend or rollover into a Stage 4 bear market.
Here’s some quotes from Stan Weinstein on what happens in Stage 3:
“What’s going on beneath the surface is that buyers and sellers are once again about equal in strength. In Stage 2, the buyers were far stronger and overwhelmed the sellers.”
“Volume is usually heavy in Stage 3 and the moves are sharp and choppy. If you’ve ever heard the expression that a stock is “churning” (moving sideways on heavy volume), this stage is an outstanding example of it.”
“So remember – no matter how powerful the fundamentals, no matter how convincing the story, you are never going to buy a stock in this stage because the reward/risk ratio is strongly stacked against you.”
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