Volatility to continue.......

It has been a very volatile week in markets since previous Friday.

Last week was the-worst week in 2 years.

Reasons given for this volatility / slump are many, they are :

10 year yield @ 2.88%...a 4 year high

Wage inflation picking up.

High Frequency Machines / Traders have gone out of control....

VIX related derivatives are running out of control

BUT the-most potent reason was simple.....we have gone too far too fast....or... major complacency in the mind of traders...

In 2017 S&P 500 was UP 19.4%...

In 2018 in few weeks we added 7.5% in S&P 500, Nasdaq added another 8.7%, Dow 7.7%...

In 2018..AMZN was UP 20%, NFLX UP 43%....we are talking max 6 weeks of 2018.....

SO...it was inevitable that we would correct sooner which has became later since 2017

SO.. after a gain of 26.9% in S&P 500 we pulled back 11.84% from high to low......

What stunned everyone including me, not 11.84% pullback , but it is the speed of this pullback, 6 trading days did it all......

About volatility, i expect it to continue for several weeks, UP DOWN like a yoyo....this may entail retesting and going below Friday's lows.......

SO..do not be complacent again, try to book profit IF you can find any and try to be nimble until volatility dies......

We have a target of S&P 500 for all 2018 which is 3025

Support around 2540 level...which got penetrated easily as low as 2532.69 on Friday.....S&P 500 went below 200 DMA...along with Russell 2000.......

It is very important to adjust to the market we got, not the the market we want......

Good luck with your own take of this market and your own comfort level.

BLOG does NOT give buy or sell.

Saleem