A market that quickly became overbought to start the new year which not only fought off any type of noticeable price correction but actually pushed higher yet often provokes incredulous gasps from bears and out of position traders. The price action amounts to an illusion of walking on water, as the threat of a sharp sell-off seems to linger around each corner. Just when it seems like the market is about to crack, the selling is met with apathy, at best, and a bounce quickly erases any weakness.
Eventually, this market will indeed see a price correction. Whether that comes with the S&P at current levels, at 1500, 1515, or 1525 is anyone’s guess. My main focus for now is staying on top of market rotations and keeping an open mind for exactly what we have witnessed in 2013–Rallies followed by corrections through time (sideways action) in lieu of sharp price givebacks.
In my next post, I will flesh out exactly what I am looking for in one key sector that has recently benefitted from rotation.
