16/04/18

8 Reasons To Hold Cash (Markets Are Rational... Until They're Not)



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8 Reasons To Hold Cash (Markets Are Rational... Until They're Not)
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Via RealInvestmentAdvice.com,

Over the last several weeks I have been addressing the potential for a reflexive rally from market support. I laid out three possible paths for the rally which I want to review. Let's step back to March 23rd:

"With the breakdown of the market to the 200-dma, the market is now at a much more critical 'make or break' juncture. Here as some points to consider:

  1. The market triggered a short-term "sell signal" last week with a break of the 75-dma. (bearish)
  2. The market is "oversold" on a short-term basis which provides fuel for a reflexive bounce. (bullish)
  3. As I will discuss in a minute, the longer-term uptrend of the market remains intact. (bullish)
  4. Support held, again, at the rising 200-dma on Friday. (bullish)
  5. The short-term downtrend of the market continues to gain strength. (bearish)

Considering all those factors, I begin to layout the 'possible' paths the market could take from here. I quickly ran into the problem of there being 'too many' potential paths the market could take to make a legible chart for discussion purposes. However, the bulk of the paths took some form of the three I have listed below."

  • Option 1: The market regains its bullish underpinnings, the correction concludes and the next leg of the current bull market cycle continues. It will not ....
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