While I’m not about to¬†declare¬†victory for this timing call, today the bears made great progress towards this market having a proper correction. Now one must define what a “proper” correction is. I know many would like for me to give an exact formula when it would be safe to get back on the long side, but it’s never that easy, mostly because no two corrections look exactly alike.

During one correction you may be able to use Fibs to determine an area where the markets may bounce. Another it could be a key moving average, such as the 100 or 200 day moving average. And others it may be as simple as letting enough time pass for a market to digests a large move to the upside, so it will be able to power ahead for further gains.

At this point in time the market is giving plenty of warning signs that the upside is capped for the time being, and it’s time to work off some of the froth that it’s accumulated over the past 18 months. If you take a look at the Nasdaq on a 5 yr weekly you’ll see that we’ve completed a double top pattern and a corrective period makes complete sense, and if I had to pick a ballpark figure for a deep correction, it would be around the 2500 area, right around the lower Bollinger Band.

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Today wasn’t a complete write off as there are plenty of bullish setups in the gold and silver space. EXK ANV GG SVM to name a few. Also a relatively unknown utility company, PNM, and a biotech stock, BIIB. Both of which are traditional defensive plays.

Related Posts:

Lack of Quality Long Setups

Massive Bearish Wedge on Wkly Nasdaq

One Good Trade by Mike Bellafiore Reviewed

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