MAY is telling us more than what we were ready for....

MAY is signalling a crisis that nobody predicted......thus we have a MAY stock market which was never seen since 1940....we were down 8.20% in S&P 500 in MAY alone....from high of the year ..we are down 10.69% when May ended......

Technically.... only Nasdaq is healthy & is above 200 DMA.....while Dow & S&P 500 struggles below 200 DMA.....

RSI in S&P 500 is a touch healthy @ 40.09......

In trying to analyze market behaviour which has been pretty poor...following scenario COULD be taking place :

-Worldwide economic growth rate COULD be "below expectations".....

-Worldwide economic growth rate COULD be "well below expectations"....

Based on how jittery the markets ARE..it is SAFE to expect "well below scenario"

IF we go with worldwide economic growth being well below expectations scenario...then market will struggle with 200 DMA..which it has been...

The strategy for traders is to reduce exposure & book profit frequently......

Long term investors CAN buy strong stocks & stay invested.......

BUT... IF 1040 in S&P 500 HOLDS...then we ARE looking @ "double bottom".....which means a very aggressive posture be taken by traders.......

Markets COULD be discounting slower GDP growth than the Euphoria of early 2010......

MAY has certainly given all of us another look @ economic picture as articulated by markets...message of the market has been pretty clear...."all is NOT well in Euroland"

I am maintaining a "semi-aggressive" exposure of 50% in my portfolio..as I get more CONFIDENT near lows......

I am also pruning stocks which are showing "relative weakness" & trading strong stocks.....booking profit needs to be the motto in these volatile & unpredictable market.....

Here is my $/sector allocation as of Friday :

NVDA 21.11% Tech/Graphics
JDSU 20.79% Tech/Fibre Optics
CRUS 20.70% Tech/Chips
LVS 19.46% Casino Operator
TCK 17.94% Copper/Coal/Zinc

As you can see that I have a diversified approach even in my "swing trading" strategy.....

Money CAN be made in any kind of markets...provided you understand & strategize for the current environment.....Instead of predicting markets,one must accept markets the way they ARE......

Good luck in your strategy.

World markets are open on Monday including Canada.

BLOG does NOT give buy or sell.

Saleem