Was Friday start of a major correction ????

Friday was Option Expiry.......

Going into Friday traders,investors were most optimistic since Jan 2010....

Option players were most optimistic since July 2007...put call ratios were off the chart.....

So..... SEC & GS decided that MM of most options which is GS.... needs a break....some are estimating that GS benefited to the tune of $1 billion in making market in options on Wed & Thursday....???

This windfall of $1 billion should help in settling SEC case..where a slap on the wrist solution is the probable outcome....

SO..let us leave the "conspiracy theory behind" & look @ the potential scenario for market....

Friday selling was "overdue".....based on RSI reading which was flashing DANGER for a while with Thursday's reading was SCARY.......

RSI reading is listed in comparative form for Thursday vs Friday :

Dow 76.28....62.37

S&P 500 78.60...60.93

Nasdaq 82.57...68.39

As you can see that RSI has corrected in a HUGE way in one day from 14 to 18 points......which bodes well for giving support to the market....

IF we all understand that..... this correction was more than OVERDUE & GS gave a very good excuse to book profit......

GS is NOT a market event...but was a "trigger" for swift profit taking........

Lot of STOPS were taken out in many stocks.........

BUT...by the end of the day MANY stocks were down around 1% to 2% only.......

YES..Financials will be under "cloud" for few days.....BUT will come back also in matter of weeks.......

SO...Friday was a "positive development" to correct technical OVERBOUGHT conditions.......

Most stocks are still in healthy mode & should move back UP quickly....

Technology looked particularly strong despite GOOG big dive........

INTC & other techs are more of an indicator than GOOG as to the strength of that sector...look @ AAPL..it barely went down......

SO...the moral of the story is ..Friday's correction gave another opportunity to buy the dips in strong sectors where tech is the leader ......

Monday...... close could be GREEN......

Here is my $ & sector allocation :

RIMM 42.56% Tech
MU 30.41% Tech
TER 18.11% Tech
LDK 8.92% Solar

I have allocated 50% funds to the market from my previous 20%...YES it will remain a trading market where profit needs to be booked.....unless you want to risk it for long term gain.....a strategy which has worked better than trading....

Many earning report is due in next few weeks...with AAPL on Tuesday....AAPL ER should be a "blowout".....which will be very good for techs in particular.......

SO..do your OWN due diligence & have your OWN view of the market.Being diversified & overweight in tech should work out.

BLOG does NOT give buy or sell.

Saleem