slipped 0.3% Thursday, making this the third losing session in a row, and the index opened low enough to have given back all of last week’s impressive gains.As they say, easy come, easy go. Anyone who got greedy last week and was holding for even higher prices watched all of their profits escape. But this doesn’t surprise those of us who have been doing this for a while.
Once we recognize these patterns and conquer our impulses, we can make a lot of money from other people’s mistakes. This is what I was telling readers two weeks ago when the crowd was convinced stocks were going crash a lot lower moments before they rebounded 150 points instead.The market’s natural inclination is to go up, and breakdowns are breathtakingly fast. Combine those two concepts, and [August 25th] modest rebound definitely favors the bulls.
Well, here we are. A big portion of August’s rebound has been wiped out, and the lucky ones have nothing to show for it. Those who couldn’t control their impulses and were chasing prices higher last week got in right before the fall and are sitting on a humiliating pile of losses.As for what comes next, these swings are vanilla sentiment gyrations and nothing more. Going up and down like this is as natural as breathing for the market.