11:58
Unknown
Next few weeks we are in for a pullback to support level.......
S&P 500 went to 1775.22, currently we are @ 1761.64....
You may be wondering why a pullback is imminent ?
Biggest reason is the current read on bears ratio...we are currently @ the lowest reading since November of 2012...a 12 month low......16.5% is the lowest bears i can recall in a long while.....
& yes bulls are jumping to 52.6% another high reading in a while......
Also VIX @ 13.28 is another number to worry about......
SO...indices near all time or decade highs, low bear % & VIX near lows is a recipe for a pullback.
NOW the logical question is how low we can go.......
S&P 500 can easily go to test 1700 support area ...that will be a pullback of 75 points from its high...that is a pullback of 4.23%....generally we get pullbacks of about 6% which implies lower than 1700...6% pullback can take us down 106 points from 1775 which translates into S&P 500 @ 1669 area.....
Many will argue that November & December are strong months which it still could be after this pullback.....
IF we get seasonal money flow then 1700 area may hold.... otherwise down we go to 1669 area.......
It does NOT mean that you should sell all stocks because not all stocks go down with the market, many sectors are doing well like Solar, Airlines to name a few...these can be held in a downdraft......
All this means that over-exposure needs to be monitored & new buying held off until "froth" is gone.
Evidence of weakness can be seen when good earnings reports are being ignored & slight weakness in earnings are being sold off.
For most...it may mean doing nothing IF long term objective is well defined & comfort level is high.
It is important to factor poor technical picture in your analysis, being aware is better than being caught with a surprise pullback.
BLOG does NOT give buy or sell.
Saleem
S&P 500 went to 1775.22, currently we are @ 1761.64....
You may be wondering why a pullback is imminent ?
Biggest reason is the current read on bears ratio...we are currently @ the lowest reading since November of 2012...a 12 month low......16.5% is the lowest bears i can recall in a long while.....
& yes bulls are jumping to 52.6% another high reading in a while......
Also VIX @ 13.28 is another number to worry about......
SO...indices near all time or decade highs, low bear % & VIX near lows is a recipe for a pullback.
NOW the logical question is how low we can go.......
S&P 500 can easily go to test 1700 support area ...that will be a pullback of 75 points from its high...that is a pullback of 4.23%....generally we get pullbacks of about 6% which implies lower than 1700...6% pullback can take us down 106 points from 1775 which translates into S&P 500 @ 1669 area.....
Many will argue that November & December are strong months which it still could be after this pullback.....
IF we get seasonal money flow then 1700 area may hold.... otherwise down we go to 1669 area.......
It does NOT mean that you should sell all stocks because not all stocks go down with the market, many sectors are doing well like Solar, Airlines to name a few...these can be held in a downdraft......
All this means that over-exposure needs to be monitored & new buying held off until "froth" is gone.
Evidence of weakness can be seen when good earnings reports are being ignored & slight weakness in earnings are being sold off.
For most...it may mean doing nothing IF long term objective is well defined & comfort level is high.
It is important to factor poor technical picture in your analysis, being aware is better than being caught with a surprise pullback.
BLOG does NOT give buy or sell.
Saleem
Posted in: Mixed
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