Moments of Truth and What The Playbook Says Happens Next…

We all face moments of truth.

As I get older and as little more comfortable with life, my moments of truth are mostly about helping others get past and through their own moments of truth.

When I am in Phoenix, each of my road bike rides has a few miles where I just can’t avoid traffic. I have to be extra focused. I don’t dread them or get excited…I just know they are extra risky.

Like people, companies and markets themselves face moments of truth.

The markets right now are facing one of these moments. Take a look at this chart of the S&P:

The sellers overwhelmed the buyers as December started. That set in motion a waterfall selloff (codenamed ‘glitch’ by Fat Nixon).

We have now gotten the ‘oversold’ rally that the textbooks say you get after a panic.

The markets are at a moment of truth. They will roll over in this area or start to eat through this technical resistance at the points of the breakdown.

It’s not just fundamentals and math…it’s human behavior.

Technically, the odds are we roll over before we make another attack at these levels. Fundamentally, nobody really knows.

Charlie has a great post walking through probabilities based on all the data we have at moments like these.

Time will tell all.

You have to love the game.

Also published on Medium.