Stock Market Analysis

Monday, February 11, 2013

First Trading Day of the Year of the Snake...

Gong Xi Fa Chai! A Very Happy and Prosperous Year of the Snake to everyone!

We bid the Chinese year of the Dragon farewell last weekend and ushered in the year of the Snake. According to traditional Chinese astrology, this year of the Snake is going to be one of mixed fortune (which year isn't? LOL!) so here's wishing all of you stay on the correct side of the fortune!

US market was completely unimpressive this first trading day of the year of the snake. The Dow closed down marginally by 21 points as it continues to move sideways, struggling against the grossly short term overbought condition. Indeed, the US market has been trying to push this short term overbought market condition a little bit too hard, resulting in a market that is going nowhere. Stocks move in waves. Everytime the market gets into short term overbought condition, a slightly pullback is necessary to digest that overbought condition, setting up better entry points which encourages more buying and a healthy new high. That is what is missing here. This might also be why so many experts are predicting a significant correction from here. Indeed, the longer you put off a pullback, the harder it will be when it comes. This is time to be extremely cautious.


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