If everyone expects a correction it may not come the way we know it, the markets likes to move in direction of least resistance, a 'general consensus feeling' in a certain direction makes market move that much more difficult.
Like any other market this market is trying to base at these levels, the market has 1228 as its first support and 1192 as its second support, this market also has other indicators, the NDX and Composite and the SOX, when we tested last time in Oct 98,1320 on composite we never really touched below 1997 Oct, 845 lows on S&P when composite never really took out the 1520 support.
For me this is a clear indication that we may see a 15% to 20% retracement in composite to 2200 or even 1980 but SPH proportionately may not move with the same ferocity down, we may be only be at 1170-80 on SPH at composite 1980. However at SPH 1130 we may see composite at 1720 where this whole sector will be a great buy..
The most important thing is to be invested in stocks and sectors which are going to be major benefactors of this rotation.I think this is going to be an interesting market the NDX leaders may soften but new leadership is in offing, for me I will take cue from transportation, oils and Banks these are the sectors sitting on major 200 days moving averages or very near, these very same sectors are most prone to a bounce.
I think at every major support on SPH, the fall will be arrested like 1228 and 1210 or 1192, it is important at these levels to watch for DOW and DJT alongwith BKX to watch if overall market is breaking. The sector divergence the way we saw it in the move up (NDX and composite was bouncing from 1020 and 1320 where most of the analysts were still looking at DOW and SP) may help the market undergo a major correction without much of an impact on DOW and S&P. |
