Here we are ....Wednesday 2.15 is only two full trading days away.......
Majority of pundits & traders are in "hopeful" mode......they are hoping that Fed will find reasons to continue $85 Billion bond buying.......
I am of the view.... that Fed may give a concrete time table & details as to when & how much they will be buying......
The problem with any time table is that "reaction will be quick" in equity & interest rates......
Market yield will front run fed time table...meaning that yields will rise quicker than Fed intentions....this will impact equities in a negative way.....
As we have witnessed from that famous May 22nd minutes...things have not been the same in equities & yields........
SO...the question is where the next support may be......?
In S&P 500 it may be in 1550 area.......this is 76 points away or 4.67%.......
Total adjustment in equities from Fed change in policies may add up to 1687.18 to 1550.00...a potential drop of 137 points or a drop of 8.12%........
Beside fed related drop...we may be further vulnerable to data coming from emerging markets, China , Europe , Latin America & USA...
IF we have weaker than expected data worldwide, then this pullback may travel to below 1500......
Emerging Markets are down 13.28% since start of the year based on EEM......
World markets has a tendency to play catch up on the downside.
CMF in S&P 500 is @ 0.001...almost flat.....money flow is neutral.......
BUT ...there is some good news......
Gold, Fertilizer & Energy stocks are expected to do well from July forward till end of September / October.
SO..book your profit in Techs, Retail, Housing, Financial ASAP
We are extremely vulnerable from technical point of view...50 DMA is here to be taken out on the downside...in a hurry......
BLOG does NOT give buy or sell.
PS...thanks to stocktrader for doing Friday's recap.
Saleem
10 comments:
Hey Saleem,
Interesting writeup this week--I am surprised to see you so cautious! As you know I don't look at your Sunday outlook until I have finished mine, so the almost direct opposite views we have are probably indicative of the contrasting opinions many investors have right now.
Looking ahead, any thoughts on end-of-quarter flows or earnings season? Do you expect many preannouncements?
I hope your Friday off was productive or enjoyable or both! :)
Stocktrader
P.S. For those who don't know, I post my weekly recap/outlook on Saleem's previous post (usually the Friday PM one) so as not to clutter this one with a large comment. Saleem has indicated in the past that he feels visitors may find it useful so I continue to write it up weekly, although in fairness I receive many benefits myself from the preparation/composition.
Hi Stocktrader,
Thanks for your feedback.
My reading of tea leaves are "not optimistic".
When Fed goes south...so does the market.....in the short term.
Once TAPE has adjusted to the "new & improved pronouncement from the fed"......then we find footing.
YES..your recap is an excellent tools for many visitors as it gives a "complete perspective" on how & why you arrive @ your decision making.
Saleem
Hi Saleem I totally agree with your view on market drifting down cause of reducing bond purchasing, only what i cant get how is gold and energy stocks will go up ?? dollar is oversold likely tapering will make dollar run so metals and energy will go down , unless it will be final drop and then they will start running . what is your opinion ?
Hi Djovanny,
Gold, Fertilizer & Energy stocks have seasonal strength in the time period i am talking about.....this is based on pattern established for decades...
On a day to day basis anything can go down or UP in case of US$.....IF you look @ US$ chart DXY..you will see a renewed downtrend....yes US$ can be UP for few days on Taper news but then it may stay the same to allow for strength in seasonality.
Saleem
Hey Saleem,
Sold my PFPT @ 23.25 avg. The RSI > 80 has been staring me in the face for a while now and I finally took the opportunity here to book the profits. I hope to buy back lower.
Stocktrader
Hi Stocktrader,
Good move of booking profit in PFPT.
Friday was spent with a close friend & it was a nice get together after 10 month gap.
Saleem
Hey Saleem,
Sold SWC @ 11.92. It is starting to underperform and is slipping below some key technical levels. There is risk that the new CEO will do large writedowns on some of their assets that have lost significant value since purchase. Although this ultimately may mark the bottom for the stock, I don't see a lot of reason to be involved right now.
Stocktrader
Hi Stocktrader,
Good to prune when stock do not perform.
Saleem
Hey Saleem,
I really like these big up days to indicate where soft spots in the portfolio might be. A stock not performing is usually more important to recognize than a stock that is.
Stocktrader
Hi Stocktrader,
Relative performance is the "easiest way to evaluate strength of any stock or sector"
PFPT is down after you sold.....RSI rules !!!!!
Saleem
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