After a runup of 12.64%, time for a pause ?

From 3rd week of December 2011 to first week of Feb 2012, we had a straight line run from 1202.37 to 1354.32, this was again of 151.95 points or 12.64%.

This move is extremely rare & is healthy to pause & correct little bit. IF we don't pause soon, a sharper fall may follow.

The normal line of support is always 50 DMA, in S&P 500 it is @ 1281.98.

Greece was an excuse after huge up move.

Even IF Greece comes on side, any celebration may be short lived.

Correction in markets are normal in any bull run, sometimes it is extremely sharp & swift or it is slow & gradual.

IF we find support @ 1281.98, then it is a correction of 5.34%, this will be a giveback of 42.2% of  up move.

In a euphoric market which we have seen, many traders do not want to think or be ready for a downside possibility.

Any downside TAPE will be considered healthy for future of this bull market.

I feel too much optimism has been built-in, even Roubini has decided to be bullish around 1354 area & is predicting next six months to be UP.

I will encourage booking of profit @ the least & switching to laggards with good business model.Ideally, i recommend reducing exposure by 50% to preserve gains & be ready for future bargains.

YES, this is a bull market, but it needs a healthy pullback.

My exposure is around 97%, which is a neutral mode.

RSI in indices have come down as listed :

Dow 61.92

S&P 500 67.42

Nasdaq 72.77

A print in 50's will be a good entry point.

There has been tremendous moves in many stocks like AAPL,LULU,LVS,BWLD,CMG,AGU,WPRT,COH to name a few. Those who were lucky to be in these names have benefited the most from this bull run.A giveback is more than overdue in most of these names.

It is important to recognize strong stocks, for a better entry point. In major bull market strong stocks gets stronger after each pause.

While we wait for correction to come, it is important to do our research in good growth story. For some of us, this move came very fast & may not have benefited as much.But there is always a second chance IF we are ready.

Good luck with your OWN view of market & stocks.

BLOG does NOT give buy or sell.

Saleem