Bear Market Behavior

Two ways to look at the action.

First: Those late to shorting the Emerging Markets (EEM) are going to get whacked.

Second: Those shorts properly positioned, are going to take a hit but will have an excellent opportunity to move stops after the smoke clears.

Not addressed, are those who think this is an opportunity to go long.

It’s about 25-minutes after the open. The daily chart of EEM, below shows current action.

Emerging Markets, EEM Daily

It’s clear that price action is attempting to break through the trend.

This type of action is typical bear market behavior.

Bear markets are all about price destruction along with an overall downward direction.

The market’s objective is to make sure as many as possible are thrown off the main trend (stopped out, busted out) and not able to participate.

Summary

If the downtrend is still in-effect, EEM price action will stall and then ‘hurry itself’ to get back into the trend … after the shorts have been cleared out.

That short clearing could be just hours or even days.

At this juncture, the current stop for EDZ-22-01, remains at 11.96, as detailed in this post (not advice, not a recommendation).

Update: 10:32 a.m., EST. Position stopped out at 11.96 and posted an overall gain of 8.33%

Stay Tuned

Charts by StockCharts

Note:  Posts on this site are for education purposes only.  They provide one firm’s insight on the markets.  Not investment advice.  See additional disclaimer here.

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