TAPE has been in overdrive since 1485.01 in S&P 500. This run to 1563.63 was 78.61 points or 5.3% took place in last 14 trading days, that is unheard of & it requires rest or building of base again.
Latest bull bear read is also extreme, 50% bull a sharp jump from last week & bears @ new low of 18.80..sign of imminent pullback....
VIX also @ near closing low of 11.30 also spells trouble...
Many gurus are extremely bullish which also spells trouble....
TAPE definitely requires building base which may need some consolidation from current level.
A minor pullback seems to be imminent which will be healthy.
Many technicians are pegging S&P 500 target anywhere from 1647 to 1700 level for 2013, these are not unrealistic numbers but may require several pullbacks between now & eventual target of 2013.
Upcoming base building does not warrant an exit from market but a realization that we are in a digestive phase & sector rotation may come into play.
Laggard sectors are Gold, Base metals & Technology.
It is important to keep an eye on the laggards & incorporate strong ones in your portfolio.
It will be interesting to see how Fed meeting may impact TAPE. I am of the view that Fed meeting statement may not do much this time as we are overbought.
In conclusion, this week may be the week to focus on future leaders which may emerge.
Sit tight with your high conviction stocks & prune which have not worked or showing weakness.
Good luck with your own view of TAPE & your comfort level.
BLOG does NOT give buy or sell.
Saleem
6 comments:
Hey Saleem,
The huge drop in bearish sentiment really struck me when I looked at it for my writeup. The only good part is the bullish sentiment didn't spike as much nor hit new highs so there's a lot of people looking for a correction still which means at least some cash is waiting on the sidelines. I think the quarter-end performance chase can be the overriding theme with so many managers behind but the market could definitely be more choppy.
Also, I didn't read in-depth into this Cyprus bailout problem before just now, but it seems we could be in for a rough Monday...
Stocktrader
Hi Stocktrader,
Pullback is desirable & healthy @ this stage.
Fact being overbought can incorporate many other reason to justify selling, when oversold many reason don't matter & we ride "wall of worries"
Last week of March could be very productive for all of us.
Saleem
Hey Saleem,
Sold BSFT @ 27.201 as I feel it might be pressured by quarter-end selling and its had such a great run already. As we approach earnings season also, I wonder if the window for being acquired has closed a little?
Stocktrader
Hi Stocktrader,
Excellent run in BSFT...good move in booking gains.
Saleem
Hey Saleem,
Sold AUDC @ 3.87 due to weakening chart and A/D statistics. The downside potential is large here if we see a real break and the upside looks limited as sellers always seem to emerge on any pop. At this point, I will want to wait until after earnings to consider re-entry.
Stocktrader
Hi Stocktrader,
It is good to clean-up portfolio IF they are lagging or showing weakness.
Saleem
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