Is this a market correction or pullback ?
What a wild ride this was last 2 trading sessions. Friday the market sold off harshly towards the end in the last 15 minutes of the day. Some folks came up armed with the idea that late Friday we can put an imprint on the chart there are no buyers in the last 15 minute and they did. It was a sneaky tactic to say the least. Did it work? Yes it did.
The market opened higher today with futures trading few handels up and than the sell off continued to the downside. SPX touched 1620 and NDX touched 2950. There was lot of talk by some technicians that we shall see the 50 day on SPX at 1600 and so on. Charts were flaunted around on Stocktwits and Twitter. Reason? These people were short since Friday and they wanted to kill the market. But the market surprised all of us.
The ISM ( Institute of Supply Management) numbers at 49 were dismal at best. Any number above 50 is an expansion in the economy and any number below that is contraction. The manufacturing contracted and that sentiment echoed in the market and that fueled the early sell off. Some folks were convinced that the bull run is over and started liquidating positions taking in whatever gains they could.
This has been one slow and nascent economic recovery. A slow spiraling recovery with the unemployment picture still relatively bad at 7.7 percent unemployment rate. But the bad news these days are good news and hence the market sentiment shrugged it off just like it never happened and the buyers stepped in. Both the NDX and RUT which lead the charge to the upside ended in the Triangle we have outlined in the video. SPX is still below those trend lines, and it is the weakest of the three.
With almost a 50% rectracement in SPX we are almost back up again. Tuesday is always a bullish day as of this year and expect this one will behave the same. That is all based on folklore and innunendo. We shall see if the bulls push the market back up again.