More than anything it was the light volume that appeared most notable about Wednesday’s action.. Light volume pullbacks are generally regarded as bullish. Yet in my research I have found that when pullbacks begin on very light volume the pullback has a good chance of deepening. Today’s mild pullback in the SPX occurred on the lightest NYSE volume in over 2 weeks.
These results suggest a mild bearish edge over the 1st 6-7 days. The edge is not the most reliable as the “% Profitable” is close to a coin toss. The edge lies in the fact that downside risk has strongly outsized reward. I took a more detailed look at this last night in the subscriber letter.