Mini Crashes and Rebounds

We have had a sharp snap back rally from the mini-crash of last week. The question now is, "Do we jump back into the market or wait for a retest?" Much of the data suggest we wait for a pullback before jumping in. Jason Goepfert , who pens for the Sentiment Trader, points out that after the majority of recent steep declines or mini crashes the recovery from the lows was usually turned back at the 62% retracement level. Currently we have rallied 62% from the lows of last week. The charts below show several other mini crash events of the last twenty years. Every rebound was repelled at the 62% retracement level. The recent bounce was so swift most were unable to take advantage of it and get invested at lower prices. If you are looking to put money to work in this market just be aware that the probabilities of a pullback here are higher than usual. We most likely will not get back to the lows but better prices may be achieved with patience.


APRIL 1987






















OCTOBER 1989






















AUGUST 1999






















APRIL 2000






















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