Links: Market Top or Correction?
Chris Perruna posted a brief article with a few major points and well-annotated charts in his article “A Natural Correction or a Top?“.
Perruna notes, “Corrections are due when markets move up by 30% over their levels from the prior year.”
He also annotates charts on Crude Oil, the Nasdaq, and the Dow Jones.
I wanted to point to this brief analysis and have readers address the points he makes.
Also, if you wanted a major linkfest a Sunday afternoon reading, The Big Picture provides a plethora of links from blogs in categories such as the overall economy, market, and housing.
The Active Trader makes a bold statement with the post “What the Market Will Do Next” and notes that there could be similarities between the February 07 ‘crash’ and the June 07 ‘thing’. The chart deserves a look.
Bill Cara’s Saturday report is another absolutely wonderful reference, containing various tables of ETFs and stocks sorted by one week relative price performance, as well as great market analysis.
Corey,
I wonder if the topic of “Has the market topped” will continue for the next week or so. I see a good chance of the VIX chart firing up and making those big swings in the market in the near future. Remember the times when the market can be down 80-100 points in the morning but finish the day up 100 points? Then, it will do the opposite the very next day and carry on like this back and forth for a short time. This is what makes people “Afraid to Trade” because they feel they just can’t figure the market out. Because of this I chose not to enter many positions for the next few days. In your experience, what do you see for the market in the week ahead?
As always, I enjoy your writings and appreciate your clear desire to help people profit through the stock market.
Have a great week!
Rich Strehl (Active Trader).
Rich,
The VIX has been elevated but cooled off Friday – it’s often difficult to tell the aggregate fears/optimism of collective traders, and yes, during volatile times, the market doesn’t just ‘plunge,’ but rather swings (often gaps) up and down during times of market uncertainty.
Another thing – I may post on this – is that the market has been going up steadily on bad news (economy slowing, gas prices up, recession possible ahead) and then what caused the market to fall? The Fed said the economy would recover and the economy will be stronger than expected. If you take this at face value, confusion and fear is the result. “Why does the market go up on bad news and down on good news? I give up!” A deeper understanding is required… as well as experience.
I try not to make many predictions on the blog, as that’s not my service here, but I would be surprised if there isn’t a bit more selling or volatile moves to come. This bull market has beeing going strong since a sharp correction May 06 and Feb 07 and the strength of this market has floored me and it wouldn’t surprise me if strength continued. But if so many people expect a correction, the market usually rallies and confuses them further. I’m like you in that I’m reverting to smaller positions until a little uncertainty clears way. I’m a risk-averse investor/trader personally.
I enjoy your writings too as well as your thoughts and support. Be safe out there!