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Is That It For The Correction?

  • Written by Syndicated Publisher No Comments Comments
    December 18, 2013

    Expectations for at least a short-term correction have been widespread, even among the most optimistic bulls, reasoning based on the high level of investor bullish sentiment, overbought technical conditions, that tapering back stimulus by the Fed has not yet been factored into prices, and so on.

    There certainly appears to be an overbought condition, particularly in the Nasdaq.



    But the 50-day m.a. has been mentioned most often as potential support.

    So has the correction already ended?





    Or will the correction resume down to the trendline that has been the bottom of previous short-term corrections this year?




    Or could it even be a further correction down to the 200-day m.a., which hasn’t been touched this year for the first time in at least 15 years?




    Since the market’s short-term gyrations this year have all been related to Fed remarks about the possibility of tapering back stimulus or not, it will probably again depend on what the Fed says or does. Can Bernanke make the right promises tomorrow to salvage a traditional Santa Claus rally?

    Let’s hope so if the old Stock Trader’s Almanac saying has any meaning, which is; “If Santa Claus should fail to call; bears may come to Broad & Wall.”. The Almanac defines the Santa Claus rally as being the last five days of the year, and the first two days of the following year, and says if it doesn’t show up, it is historically a bad omen for the following year.

    Some improvement in home debt situation anyway.

    There is some concern that rising mortgage rates and higher home prices have the housing recovery stalling.

    But there is some good news created by the higher home prices.

    Corelogic reported this morning that in the third quarter almost 800,000 more residential home-owners saw their home value/mortgage equation tick up into positive equity.

    I have to say I was surprised at the size of the lingering problem. The improvement leaves 6.4 million homes, or 13% of homes with mortgages, still underwater, owing more than the homes are worth.

    To read my weekend newspaper column click here: Three Stocks To Avoid

    Subscribers to Street Smart Report: NOTE: The next issue of the newsletter will be out tomorrow in your secure area of Street Smart Report.com , a week early, since the regular schedule would have landed it on Christmas Day,

    Images: Flickr (licence attribution)

    About The Author – Sy Harding, Street Smart Report

    Sy Harding publishes the financial website Street Smart Report Online and a free daily Internet blog at Sy’s Free Blog. In 1999 he authored Riding The Bear – How To Prosper In the Coming Bear Market. His latest book is Beat the Market the Easy Way! – Proven Seasonal Strategies Double Market’s Performance!

    It includes our research and analysis on the economy and markets, and provides charts and buy and sell signals on the major market indexes, sectors, bonds, gold, individual stocks and etf’s, including short-sales and ‘inverse’ etf’s.

    It provides two model portfolios as guides. One is based on ourSeasonal Timing Strategy, one on our Market-Timing Strategy.

    In depth updates are provided every Wednesday, with interim ‘hotline’ updates every time we make a trade. An 8-page traditional newsletter Street Smart Report is provided on the website every 3 weeks, in pdf format for viewing or printing out.

    There is the Street Smart School of online technical analysis ‘seminars’,commentaries to keep you ‘street smart’ about Wall Street, and much more. 


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