Intermediate-term corrections usually have major indices drop 10-15% and usually last a good 12 weeks. We just saw one that lasted 10 days. Blame it on algos. Blame it on button pushers. Blame it on the horrible Knicks season. We just think the “A LOW” we called on February 9th, has turned into one hell of a low and as more cards have come out of the deck, odds keep getting higher that it was THE low.
The interesting thing about last week is that markets were not up that much but ended on a very high note. Normally, when you see a couple of horrid reversals to the downside, there is follow through to the downside. Instead, we get Friday’s big action.
As markets move higher, they now enter the meat of resistance. We suspect some resistance will come into play but must say markets have been working through resistance nicely. We are watching several areas in particular. FINANCIALS were never hit hard on the way down and are back above resistance with some at highs.
MEGA-CAP glamour names, for the most part, have reasserted themselves nicely. We believe they will give a huge signal to the markets. If they crap out, look out but so far, so very good.
The BOND MARKET is about as oversold as we have seen in a while. The 10 year never penetrated 3%. Many have been saying a move through that level will be bearish for markets. We are not so sure of that but we know interest rates matter.
This coming week will be important as a few of the major indices are now above the 50 day with the NASDAQ/NDX the strongest.