IIFT Daily Note with Peter Brown

We have a correction!

Posted by:  |  Time: 7:23 am  |  Topic:  |  Comments: 3
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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.

3 Comments

Conor Power

May 23, 2013

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Hi Peter,

I am on the current diploma course and the other night you mentioned about GAP plays. Is there an opportunity here for this or is the market just to uncertain?

Conor

    Peter Brown

    May 23, 2013

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    Hi Conor,

    Great question.

    Yes as we speak there is a 200 point gap.
    I would not be short here and expect an attempt to close the gap.
    We may not get all the way there but I would not be short at 11.30am when Goldman Sacs sees this

    Peter

Conor Power

May 23, 2013

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Thanks Peter, appreciate that.