Here we are in first week of MAY......when one major trading house decided to sell SHORT billions in mini S&P 500 futures contract......resulting in triggering automatic sell programs by fastest computers on earth..so a trillion $ worth of equity was wiped out in minutes....I am sure same trading house covered their shorts which triggered computerized BUY programs ..so a 1000 point loss was created by sell programs & then 600 point recovery by buy programs.....all in a matter of minutes...we end that trading day on Thursday down 347.80....
I am 100% sure that computerized trading data has footprints & is available to SEC to find any culprit..next day???
SO..lets leave SEC to their "other important activities" like NEVER knowing what goes ON daily in markets....?????
Let us analyze what happened to the markets through S&P 500 trading.......
On April 26th S&P hit its HIGH of the year of 1219.80...9 trading days later we are @ 1110.88 Down 8.93%......ABOVE 200 DMA of 1095.72....
LOW for manipulation Thursday S&P 500 hit intraday low of 1065.79 which was DOWN 154.01 points or 12.63%...
Friday low for S&P 500 was 1094.15..down 125.65 points or 10.30%........
No matter how you analyze it..it was 9 days of sharpest decline which i have observed.........
RSI @ close on Friday is @ 30.17 LOWEST in a long long time in S&P 500....
Nasdaq RSI is @ 28.74.......
These RSI numbers are @ "screaming BUY level"
NO contagion last forever BUT is taken advantage by those who have the money & wisdom to trade accordingly......
AAPL plunged to $199 on Thursday & again on Friday to $225.....a picture of market PANIC...
In time of PANIC...it is better to re-evaluate your OWN portfolio in terms of relative strength & re-adjust in relatively stronger stocks.......
When you look back...then you will realize that "booking profit" is the smart way to go in US market...& also getting out of stocks not working out is even smarter......
It IS important to KNOW the fundamentals of good companies which has already reported as technicals are shot in most stocks...
Also focus on companies that will be reporting like PCLN Monday night,which has history of beat & guide UP.......
SO..all is NOT lost......
Regroup & stay with confidence in fundamentally strong stocks.......
World economies are improving..Jobs are being created worldwide..Inflation is ramping UP...Housing is improving......
This is "the opposite" of what we were facing in 2008....
Stock prices will reflect improving economic picture....290K job growth in US should have triggered a rally of 600 Dow points on Friday..BUT hedgies wanted market to be lower..so it closed down 140 points.....
Here is my $/sector allocation as of Friday :
CIEN 35.62% Tech/Fibre Optics
TER 30.55% Tech/Test Equipment
CRUS 21.95% TECH/Chip
RFMD 11.88 TECH/Chip
Tech will be fastest to recover alongwith base metal stocks.
Ensure your OWN comfort level & do your OWN due diligence.
BLOG does NOT give buy or sell.
Saleem
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