First of all, when/if we “buy the dip”, the size of position/s need to be smaller than usual. I have no time to post any charts but I’ve odds for bottom and/or rebound 8:2. What worries me is that there could be a storm coming and we could see a couple of very strong down days without rebound. The latter scenario would obviously change the short and mid term trend at once.
Odds for a rebound/bottom comes from looking “behind the price”. There are also other charts (e.g. $NYAD) that points to “over sold” conditions. The problem with these TA approaches as over sold and expected bounce is that weak internals leads to the biggest declines when the up trend has not been strong. To put it simply, it is far more safe to buy the dips when internals look weak in a up trend (= steadily rising prices with relatively small volatility/price fluctations) than to do the same thing when there is no obvious up trend (= patterns like W V M appear).
Another thing that is not looking good in my eyes is what VIX is doing. Down 7,3% yesterday but the pattern is starting to look very ugly. I might hedge my “dip buys” with VIX..
