This Year's Fall Classic Will Be Double Bottom Callers

When I made the decision to take off over 90% of my bearish bets last Wednesday with Members, I did so with full knowledge that I may be leaving some gains on the table.

However, after undercutting the June lows we have the S&P 500 rallying back above them today, as we speak. This is happening in the face of a steep selloff in TSLA, a red ARKK, and a weekend of nonstop rumors about the standalone and systemic risks of bank CS. 

Hence, respecting the reaction of the tape, especially as we head into an improved seasonal interval for a few weeks, is something I want to do until proven otherwise. To be clear, I do not view this action as a major bear market bottom.

But the market is likely going to convince many of just that in the coming weeks. Specifically, a "double bottom," which is easily one of the most overrated chart patterns when unconfirmed, should be on the tip of everyone's tongues, if not sooner, insofar as price here versus the June lows (SPY ETF daily chart, below, illustrates as much).

Understand that the double bottom needs to confirm above the midpoint of the two troughs in order to be taken seriously as an actual bottom. Hence, the pattern is highly overrated since it is too easily prone to bias and premature conclusions by market players desperate to get that elusive major bottom. 

I do not expect this double bottom to prove true. However, I do think the market will make an effort to create the appearance of it being a viable major bottom this autumn. Hence, I laying off the short side for now and keying off rates and the Dollar to see if they cooperate for a continued rally in risk. 

And just when everyone assumes the double bottom is in for good, it may very well be time to start thinking about that next leg down, well below recent lows.