Thus far in the bull run, it's been a pretty linear rise, with dips below the 20-day volume-weighted moving average representing intermediate-term buying opportunities. We're seeing just such a dip at present, with over 1500 NYSE, NASDAQ, and ASE stocks making fresh 20-day lows.
As a rule, the longer a market spends topping out (i.e., the longer the time that elapses between a momentum peak and an ultimate price peak), the more extended the subsequent decline. The trick is that the decline can become extended in time (as we saw during the June to July period) as well as price.
With the September momentum peak and the October price high, I expect that any decline could be extended in time--not just price--which is keeping me so far from buying this most recent dip below the 20-day VWAP. I will begin nibbling at the long side when we see signs of bottoming in the new highs/lows, Demand/Supply, and percentage of stocks below their 20-day moving averages. I track all of these daily via Twitter; you can follow here or keep an eye on the blog page for the last five tweets.
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