Correction FINALLY over .......

Last time we had a meaningful correction was in October, before that it was July & now the mother of all correction which started in 3rd week of January ended 1st week of February ???....

SO..based on recent correction history we are getting serious correction every 3rd month....

The reason of every correction is the same "overbought conditions becomes oversold" BUT media will TRY to give you that something REALLY CHANGED.....

This correction took Nasdaq down 9.72% & S&P 500 9.21% while Dow 8.34%.......that is a classic correction of almost 10%........

As US market is dominated by Hedge Funds & Institutions...they are all working with
pre-programmed "computer models" which triggers based on technicals........

Many Quant Funds are either net short or net long based on their super-computers triggers.......

The only thing us mortals can do is try to understand "time sequence" & "technical range"

SO..we do know that TIMING of correction is every 3rd month ...TECHNICALS are RSI in S&P 500 is telling us that the selling is being "triggered" near 68 area intraday......

SO..be extra careful when we hit 65 area in 14 day RSI.......

Exposure needs to be reduced when we are hitting 65 RSI....booking of profit is "highly recommended" near 65 level..........

YES...it IS easier said than done..even for ME......

Market TAPE.... brings GREED very quickly and one gets mesmerized by stocks going UP......

I personally felt that once i booked profit in Solar stocks..I should be OK with Gold,Silver,Ag,Metals,Software stocks ..which were ALL weaker than last correction........

BUT..I was WRONG in my conclusion...everything TANKED as IF they have made new HIGHS...actually they went BELOW previous LOWS......

Near bottom of any correction it is IMPORTANT to quickly REGROUP.....based on how OVERSOLD certain stocks are OR which stock has the POTENTIAL of recovering FASTER......

This requires updated analysis of fundamentals & technicals....plus your OWN gut feel about stock as to its POTENTIAL.......

Having too MANY stocks...creates more losses & harder to follow its fundamentals which keeps CHANGING with market PREFERENCES.......

Sector FOCUS are NEVER constant in market....so pay attention to where the MONEY is going.....see which stocks are BUCKING the TREND..going DOWN less or going UP more.....

Sometimes it IS important to see IF some stocks are NOT making new recent LOWS..while market IS.......

YES..there is LOT to analyze during the trading hours..BUT TAPE gives you a better READ......

YES...market is ready to move UP.......

YES..strong stocks needs to be in your portfolio..skip BARGAIN.....

YES..it is OK to have one SPECULATIVE stock in your portfolio but NO more.....APWR is my spec play.....lousy on technicals but have great fundamentals/future for 2010/2011

Here is my portfolio with $ allocation & sectors as of Friday :

TSL 21.92% Solar fully integrated
APWR 17.65% Wind Turbine
IAG 17.38% Gold Mining
TC 14.89% Molybdenum Mining
SLW 14.53% Silver Reseller
PALM 13.63% Tech/Smartphone

As you can see that I am diversified with heavy weighting in most stocks..Mining & Solar still my favourite sector.....

Good luck in your OWN comfort level with your exposure....NOT everyone is comfortable near LOWS...which is OK......

BLOG does NOT give buy or sell.

Saleem