Is A Pullback In The Market Possible?

Those of you that just fly back and forth over the middle of the country, probably have no idea what I am talking about. But for those in the Midwest and the rest of you that get in your car and actually see the part of America not attached to the ocean occasionally, you will know that Cedar Point, just down the road a spell in Sandusky, is the Roller Coaster Capital of the World. Thankfully the stock market has not gotten that out of control crazy. Of course you would not think so if you constantly listen to the mainstream media. We are at the edge of a precipitous drop. Paul Farrell dropped the latest end of the world story on Marketwatch today. Yes there have been undulations in the market, but anyone with the stomach for a 10% drop has just motored along without any change since the November 2012 low. If you look at the chart below, the rising trend line has acted as support since then. This has been more like the Blue Streak above. The area in the green circle highlights the potential for another approach to that trend. It shows an Evening Star reversal pattern, and comes as the momentum indicators are also starting to show the potential for a move lower. Not a crash. It is far too early for any responsible market professional to call for that. But a pullback and maybe even a correction seems possible. If we get it, use the pullback to look for stocks that are performing well and protect gains on current holdings. And then be ready to buy when the market turns around. This is not the Gatekeeper market but just the Blue Streak market.

Disclosure: The information in this blog post represents my own opinions and does not contain a recommendation for any particular security or investment. I or my affiliates may hold positions or other interests in securities mentioned in the Blog, please see my Disclaimer page for my full disclaimer.

Original post