In the end the correction was triggered by a BIT of indecision by Ben Bernanke on QE going forward. Not a big event but it seems the market was ready to profit take and re-evaluate the bull run. Amazingly the S&P went from R3 to S3 exactly in a day ( 400 points ). Overnight the Asian market got killed.
Our job as traders now, is to decide whether this is just a correction, which may last a week, or a deeper re-think on this buy anything feeding frenzy. One thing for sure do not dive straight in here and buy. There could be a further sell off to come.
The answer is I don’t know. I suspect the market players have been given a shock. The one way bet has suffered a dent. We still have the zero interest rate effect so the market will stabilise and be attractive. The market may get a little more selective as to where they buy so periphery markets like Spain , Italy may take a bigger hit. The fact is we need to wait and see. Certainly I do not expect the market to re-bound and forget the shock they have just received. So today will be volatile but I favour a sell on any bounce. This un-certainty should last a week or so and the level it will retrace to should be come clearer overtime.
Levels today are S&P 1659 1632 Euro 1.2900 1.2750 USD/JPY 103.25 100.50 (Getting killed as I write)
As I write the market is still getting hammered. Dangerous to be a buyer here.