Here is the recent conversation I had with myself about market pullbacks.
Q: Why is the market going to pullback?
A: Because that is what markets do.
Q: When is the market going to pullback?
A: Soon.
Q: How do I know the market will pullback soon?
A: See the answer to the first question.
Below is a chart that I use nightly as a frame of reference. I drew the trendlines months ago, but Tradestation extends them automatically.
Click on the chart to enlarge…
Note the 45 degree angle trendline. The market has been oscillating around this line for months.
I’m not looking for a -10% decline here. But -1% or more seems reasonable. Thus, we want to look for stocks that are in new downtrends after previous huge run-ups. And, we want these stocks to be beneath major moving averages, and we want them to have recently surged. With that in mind, here are tonight’s honey holes. Try not to gorge yourselves.
Woodshedder, I think we had the pullback. It’s the new normal. Unlike Pimco’s new normal this one consists of pullbacks that last hours not weeks or months anymore.
Bullish, you didn’t read the conversation I had with myself, did you? 😉 Maybe you’re right. Maybe I have the timeframe wrong.
I’m not bearish. I just think we’ll see a pullback.
I think the current pullback is getting a bit long in the tooth… it’s been 50 minutes already.
Don’t worry, they’ll buy the close up.
huh huh, huh huh, huh huh…he said gorge at the honey hole.
Things have been going well for too long. I’m getting scared. Also when I see this,
http://www.marketwatch.com/story/fund-managers-bullishness-at-a-record-survey-2011-02-15-104580
I get even more worried.
Going well for too long, meh. Take a look at what the S&P did from Dec 1994 until July 1996. Maybe we correct tomorrow, but the current run is not without precedent.
I agree Pimp. It is hard to follow a good, long trend without second guessing it so much that one makes mistakes.