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Monday, April 9, 2012

The Correction Has Begun


 A market that was teetering on the edge of a correction got a push during it's fay off, as the Einsteins at the BLS decided it would be a good idea to release the NFP numbers on a day off. That gave the market an entire 3 day weekend to chew on it, and this morning the numbers didn't taste any better than they did on Friday. We have been a bit overdue for a trip to the 50dma, and we are nearly there now. The question now becomes will the 50dma provide a launch pad for another move up, or will it provide little more than w weak bounce. Volume will be the key, and today's volume, despite a market moving event, was quite low. The big money is still relunctant to sell en masse, and that could mean we are going to have a short correction.

The Nasdaq is primarily where the big money is hanging on. This is still well above the 50dma, and the price relative line is staying high. If the market is really going to crack, this will be the last place it does. If it doesn't crack, this may be the last buying opportunity we get for a while.

 The Dow industrials have cracked the 50dma with a big drop today. However, the price relative line appears to have bottomed and is starting to reverse. That is bearish.

The Russell 2000 broke a key support level as well as the 50dma, and the price relative line has broken down through the previous low. I would say this is confirmation we are now entering a correction.

It appears the unbelievable rally we have experienced since October has come to an end. While this could last a while, it could also be quite short and shallow, and may be setting up the last buying opportunity we get, as I believe that if we get another move up, it will be the last one we get for a good year or more. We should know a lot more by the end of this week.

I will have the new highs update shortly.

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