Sunday, June 5, 2011

Market Is Oversold ........ A Bounce Is Very Likely


Since 5/2 major indices have corrected on average around 6%.  That's more than any of major market sectors which makes this correction highly unusual.  In a correction, regardless of  its severity, there are at least one or two market sectors that lead the sell off, typically correcting 150% to 200% more than indices. Since that's not happening, it's very likely that cash indices are pushed down hard via their future contacts.  Since 5/2, future index contracts are sold forcefully into all cash market rallies.  It doesn't matter why they (the usual suspects, i.e. Big Money) are doing this.  What's important is that Big Money is not selling its long positions in equities and hence the recent sell off is short lived and very likely at or near its completion.

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Disclaimer: The views expressed are provided for information purposes only and should not be construed in any way as investment advice or recommendation.  Furthermore, the opinions expressed may change without notice.