January 27, 2014
I wanted to speak quickly about the market projection for the week. On TV, it was talking about the end of the world. Is it really?
Here’s some quick math. For a natural pullback, we would expect to see 38% retracement. The DOW rose from 14,719 to a high of 16,588 for a gain of 1,869 points.
1,869 x .38 = 710 points
16,588 – 710 = 15,878
On Friday, the market closed at 15,879 – that is one point away from a 38% retracement target!
In other words, this was a completely normal move.
This week, the markets MUST RALLY in order to rebound and make gains after this consolidation. The FOMC meets starting tomorrow, with announcements coming out on Wednesday. Yellen really needs to prove she is the right person for the job. Careful with your bullish positions. You may need to sell, roll, and adjust.
If we get a clear bullish buy signal, I will alert you. Remember to check out www.econoday.com for all the news events. I will be waiting and watching and trading very short term only.