Market has enjoyed tremendous support from Fed since 2009......
Since 2009 we have gone from 666 in S&P 500 to 1687....a gain of 1021 points or a gain of 153% in straight 45 months...that is a gain of 3.41% every month on average.
In this marathon streak many records were shattered & this run is among the-best in stock market history.
Would you believe it when we discuss another record.......DOW has not been down 3 days in a row this year...this has never happened either in early part of the year or later part of the year ever.
This past five months we are UP 16.8% which is 3rd highest ever in the history of stock market.
BUT.........
Fed is "changing course"........
TAPE cannot fight FED......
In my opinion.....we may have seen the highs till end of summer.
We may correct & find support & retest support rest of summer.
Fed has articulated that in next 60 days "change is coming"
Market always react "negatively" to uncertainty.......
SO...the question is how low we go in summer ?
Most trader love to see support @ 1600 area in S&P 500.....but @ 1602.82 it is only 5% from absolute high of 1687.18.......not enough considering the run we had.
An extreme reaction to Fed may take us down 7%...which is @ 1569.08.....i do not believe this is probable...
What is probable is a 6% correction which takes us down to 1585.95......this is not so bad as it is another 3.86% or 63.65 points from Friday.....
NOW...this does not mean that one should sell everything.
Many sectors are expected to be strong in summer like Oil, Gold to name a few......
Technology generally finds bottom by the end of summer.
Once summer is over & market has digested new Fed policy ....we are off to the races by end of Q3......
This market is expected to be like 1995........where in second half it went UP another 15.3%.......IF we take 15.3% from recent high of 1687.18....we have another 258 points to go ...we may be looking @ S&P 500 around 1950 area.......
Market correction bottoms out in many stages of support & breaking support.
It is time to take "time out" in euphoria......
Strategic buying in summer is the way to go, if it is "too low" one must buy....
Relaxing in summer is good for your financial health.
BLOG does NOT give buy or sell.
Saleem
3 comments:
Hey Saleem,
Great words of wisdom on many fronts! It always helps to bring back reality if things have gone one way for too long...people forget it can go the other way too!
I was a day late in my weekly comments due to a weekend vacation. I have posted them now.
Stocktrader
Hi Stocktrader,
Thanks for your feedback.
Tokyo & Fed will dictate how we perform....
Saleem
Hey Saleem,
Sold OCN @ 41.808. Given the need to digest their recent acquisitions and the increasing competition in the space, I think upside may be limited for now. I'm using this pop to raise cash for other potential investments.
Stocktrader
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