We are witnessing TAPE in serious trouble in US market.
First, there was extreme euphoria and nobody was worried @ all, this prevailed until start of last week.
By the end of last week, everybody realised that TAPE is not looking healthy @ all.
Indices are showing varying level of weakness......
Nasdaq gave false sense of comfort by staying well above 50 & 200 DMA...
S&P 500 is below 50 DMA and is ready to pierce 200 DMA
Dow is below 50 & 200 DMA and is substantially lower than 200 DMA.....
China is the real culprit, which has shaken all commodities to its knees... Chinese economy has been in freefall since 2008 peak, in my analysis, Chinese economy has not found its lowest point yet, that is where the trouble is for rest of the world......
Chinese stat is jumping all over, private agencies are calling it right while government stat are rosier than reality.
US stock market was ignoring Chinese weaknesses as if it was not happening , but by Friday everyone has woken up to the fact that China is still slumping.
Oil has also shaken many Oil producing economies, Saudi Arabia is floating bonds to make up for the shortfall, Canada has shown contraction and its currency is 30%+ lower than US.
Oil & Chinese weakness cannot be ignored anymore......
US stock market may correct more to adjust to this new global issue.
I have a feeling that Nasdaq may come close to 200 DMA which is 4849.29, Nasdaq closed on Friday @ 5088.63, that level is 239.34 points away or another 4.7% slump to be expected. This correction may take us back to March 2014....
Obviously similar or more weakness to be expected in Dow , then S&P 500.
Dow may slump 7% and S&P 500 another 6%, these are all my guesses based on current read.
There is no way to escape this kind of correction.
Inverse exposure may work.
Lower exposure is better......
Weak stocks may suffer twice as much and may not come back.
Strong stocks may suffer more, but they will recover much faster and eventually get ahead.
SO...... CAUTION is warranted @ this stage, when amber flashes, you are expected to slow down.
BLOG does NOT give buy or sell.
Saleem
3 comments:
Hi Saleem,
As the market get trickier to navigate here, I've got a little more cushion: my portfolio was +0.83% last week vs -2.21% for the S&P. Big winners were GPRO (+10.1% total with a small helpful sell/buyback), AMBA (+6.1% when sold), TDOC (+5.0%) and CSOD (+3.1%). The biggest decliners were LBIO (-5.7%), NEFF (-4.1% when sold) and MOS (-2.3% when sold).
It certainly looks like this week will be wild also, and I plan to pare back exposure further today, but maybe can pick up some bargains later in the week.
Stocktrader
Hi Saleem,
Sold GPRO @ 60.30. Ugh.
Stocktrader
Hi Stocktrader,
Good luck with your buys.
Saleem
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