Thursday, March 10, 2011

Market Reversal !!

We have had a textbook reversal in the stock market in the last 3 weeks.  The first potential indication of the end of the uptrend came on the three down days in a row starting Feb 22.  The second indication was when the market immediately failed to rally above its previous high the candle before Feb 22.  The Key to the Confirmation of the new downtrend came today when the market broke out to new lows. 

So what does this mean?  It means that this is the seasonal weak period coming in a little earlier than normal.  It is not a huge selloff or the beginning of a large bear market.  It's just a typical sell-off likely to last a few months and drop 10-15% more or less.  Traders will want to find stocks to short on this.  Investors should look for excellent buying opportunities over the next 6 months after the market has dropped the expected amount.  The buy-and-hold type can rest assured that this is a minor pullback and should not get scared out.