Equity markets set up for correction during seasonal shift

Dollar makes up Friday losses over weekend

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fibonacci, gann, stock, technical, index

The other area of concern right now is the Housing arena which quite frankly has performed this year beyond expectations. But that doesn’t do us any good right now. The HGX closed the week at 122.80 and right now has an average projection of about 118-120 but an aggressive leg can take it to about 112. Those numbers on the surface may not seem like much but the more aggressive outlook would give us another 8% drop. We’ve already had about a 6% drop.

So are there any rays of sunshine in this news? I think there is because when we came off the high the first time around March 21st a floor trader stated on CNBC that because the VIX failed to rise with the market drop he felt traders were comfortable with the lack of volatility and it would lead to a continued market melt up. My readers know different. The only time the market continues to melt up is when the VIX doesn’t drop when the market rises. This time the VIX is showing a rise which means there is respect for the correction if not fear. I wouldn’t expect fear this early in the game but respect means we are off to a good start. Keep in mind that corrections in bull markets end not because we get to a particular target but when sentiment emulates the London fog. First we get respect, and then we get fear. However if we start with complacency it takes that much longer to get to fear. Last week there was a little blood in the streets when markets got disappointed the Fed was thinking about passing on QE3.

At the end of the day it looks like strike 3 to me. With the Dollar, mining stocks and FTSE the bulls have to build a case to overcome that. With tech going the other way they are losing that battle as well. Is there any mitigating chart? I’d like to tell you it’s Copper but that one fell to the bottom of the range. The only real factor that can turn this market back up is Apple computer and right now it’s outnumbered. That being said I do think we’ll get a meaningful bounce this week but charts are in a bit of hot water for the first time in 2012.

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fibonacci, stock, index, technical, analysis, dollar, forex

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About the Author
Jeff Greenblatt

Jeff Greenblatt is the author of Breakthrough Strategies For Predicting Any Market, editor of the Fibonacci Forecaster, director of Lucas Wave International, LLC. and a private trader for the past eight years.

Lucas Wave International (https://www.lucaswaveinternational.com) provides forecasts of financial markets via the Fibonacci Forecaster and other reports. The company provides coaching/seminars to teach traders around the world about this cutting edge methodology.

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