S&P 500 RSI closed @ 38.24.....NOT @ lows of 30 area reached in early May..since then RSI has touched total of 3 times in 30 area ..all in May......
The question is WHY RSI is ABOVE those lows?
Also interestingly, VIX is also NOT as high as its recent peak?
SO..all those gloom & doom in CNBC & other media NOT causing "extreme panic"???
BECAUSE...MAYBE.....market HAS discounted all the "potential & known" issues....
Market is a discounting mechanism.......
Lot of pundits are "salivating over the possibility of S&P 500 going below 1040"...BUT it MAY turn around in a hurry...MAYBE same day & close ABOVE 1040 level.......
SO...everybody WAITS for a RETEST of 1040.....which MAY or MAY NOT come......
There is an obsession to PREDICT LOWS in market & wanting to buy @ "absolute low in stock prices"......
Ironically...market lows does NOT necessarily brings the lowest prices in many stocks...most stocks "turn UP" before lows.......
It is impossible to buy @ the lowest price.....unless one is extremely lucky.....
Most traders KNOW that markets are deeply OVERSOLD now......it may not be a bad idea to increase the exposure in this market..I have increased my market exposure to 70% as of Friday...my highest $ allocation in many months.....
CMF in markets are approaching green....NOT a sign of slumping market..smart money is on the buy side.....programmed selling are controlled by Algorithm...BUT there ARE buyers WAITING.... who are too happy to buy @ low low prices....
When we look back in few months..we MAY realize that this was the "buying opportunity"
Job Growth in US is "on track" contrary to market reaction on Friday....
Europe is NOT a basket case...only few minor economies are "challenged" which is nothing close to what we faced in banking crisis of 08.....
IF we can come out of "financial mess of 08" then Europe will be a piece of cake........
Here is my $ / sector allocation as of Friday :
CRUS 21.14% Tech/Chip
LVS.. 20.53% Casino Operator
SNDK 20.15% Tech/Flash/Nand memory maker
TCK.. 16.65% Copper/Coal/Zinc miner
CNQ..13.28% Oil & Gas Eploration
SOLF 8.25% Solar fully integrated
I have accumulated stronger stocks which are being sold off in this slump,they are holding "better than weaker stocks"
Good luck in dealing with this "emotional & IRRATIONAL market"
BLOG does NOT give buy or sell.
Saleem
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