Serious damage to many high flyers | stockbee

1/27/2014

Serious damage to many high flyers

What  difference couple of days can make.

Number of momentum favorites are under selling pressure. Stocks that had orderly uptrend have had high volume breakdowns. Many have lost a month or more worth of gains in 2 to 3 days.

This is where flexibility helps of individual traders. At the first hint of trouble you can close all long positions and don't have to seat through phases like these. Unlike funds you don't have to be fully invested all the time or have constrains of liquidity to sell in to.

A market correction like this is not a surprise after 15 to 18 months of rally. During that rally all corrections have been minor and had just one leg. They were followed by V shaped recoveries.

The V shaped recoveries were big problem for short sellers as they found it too painful to get out. Let us see if that happens again. If it does not happen in next few days we will be set for nice volatile correction.

Typically in these kind of correction once the fast selling phase is over some select longs work and good short setups show up.

No comments: