This week the market snapped a six-week profitable streak, the market was on a tear since it broke the 304 resistance level and it was time for a correction, as we have forecasted in previous market outlooks.
On the news front, there was really nothing new to move the market up or down and the truth is that all foreseeable news is already baked into the market price so whatever comes from the US-China front, earnings or the economy numbers is already old news.
If you look at technical analysis we use the Fibonacci retracement to try and estimate how deep this correction will go and we see the 306-308 levels as critical support for a light correction we estimate the market may reach those levels ( 3-5 points from where we are right now ) and then continue it’s move to the upside.
Also if we use trend line analysis we see that the short term trend line is broken in the last two days, but with declining volume which is another indicator for a correction and nothing more.
Trade Alerts
UDR was closed this week with a nice profit, we believe in the REIT market and its potential for the long term, this is why we traded UDR for the longer term , it had a downtrend that forced us to close the position but we are sure to follow and in case it will regain the uptrend we will open another long position.
We added to our SYF, BAC, NKE and VZ existing positions under the assumption that the current correction is providing a chance to re-enter and increase positions.
GSG, and GLD were closed this week by our Asset Allocation plus strategy indicating weakness in the metals sector, the funds went into emerging and US markets including TLT ETF which is the 20 years bond ETF.
All in all a quite predictable week for the US market which may repeat itself net week as well, as we are at the tail of the earnings season with no new major news to move the market.
Use this opportunity to cast the net smartly as we expect the next move to be to the upside.
Trade Safely,
Alon