Market Update 06/20/2013 Night ~ Market in Correction

[Natalia]

What a day ~ Whewww. . . . . .

In time like this we need to be fluid like water and think that anything is possible, not just stucked in one opinion or believed what the market will do, rather we need to listen to what the market is saying.

The Market gaped down more than 1% today and unable to close that gap within the first hour of the trading day, which usually signal that the market will trade in the direction of that gap throughout the day. It sure did, it kept sliding down to more than 2%.

Leading stocks that held up very well yesterday start pulling back, breakout start to fail which is not what we want to see.

Nasdaq, S&P500, and Dow distribution all "E" (Page B2 of tonight's newspaper)

May be this is the start of a deeper correction that everyone seems to want. Looking at the indices charts, both Nasdaq and S&P touches the 10 week line 3 times in the past 2 weeks, which is very close together, and the more support get tested the weaker it become, surely enough today we sliced on heavy volume. 

Before we all get too bearish and ready to short everything, lets' look at a few contrarian indicator that point to a possible bounce. It will perhaps gives us a lower risk entry to short if you prefer.

Today the Put to Call Ratio showed 12 months high at 1.29. This means that many people buy more puts that call, more people get bearish. Scott O'Neil has mentioned that Bill looks at this indicator constantly, anything over 1.2 can mark a temporary bottom.

You can read about it here: http://education.investors.com/investors-corner/483375-secondary-gauges-can-confirm-outlook.htm?Ntt=put-to-call-ratio&p=full

This snapshot from Page B2 of tonight's newspaper.

In conclusion, keep an open mind, we can go to either direction right now, trade price only, and always look for low risk set up whether you want to go long or short. Keep your watchlist fresh, always be on the look out for stocks that showing relative strength compare to the market. You can do this by scanning for stocks with RS of 90 and Accumulation Rating of A..

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~ N a t a L i a ~