FINALLY. We can all take a breather as the long awaited correction/pulback is (or has) taken place. We truly do not know how far this will go, or how far will be go down. However, the signs are pointing towards a further decline in the coming DAYS. I cannot speak for the next few months, as the overall trend is still VERY much intact and I do not think this is going to be a MAJOR MAJOR MAJOR pullback.

The banks were a concern today as I tweeted this morning (see below) they were in a very tight wedge pattern and which ever way they broke would be a BIG tell for the market. Well, needless to say – they broke down. Not only did they “breakdown” but they had a potent engulfing (scary) down move. This kind of move should be noticed, and definitely NOT a buy sign. As Scott Redler wisely said on his recap today (click here to view it), “I do not buy on the first potent down day”. I completely agree with him. Trying to be the hero too soon is a bad idea. While we could see a bounce tomorrow, I do not think you will have missed much, in other words – it is NOT worth the risk of more downside to buy into the 50 SMA after such a move. If we able to hold below 18.10 in the coming days (2-3), then I think we will see lower prices. 

Homebuilders are also a concern as they come into a deep trendline. There is some heavy sell volume out there right now in the homebuilders and I think they will bounce (and soon), but unless they give me a tactile buy signal I will not touch them. They do look a little rough right now. Not relatively strong. 

I posted (ironically) this morning on “Why Pullbacks are GOOD“. I recommend reading that to understand how to approach the market going forward. Essentially though, if we are able to pullback — it would reset alot of the charts, and give new entries – like “REFRESHING” the page. 

With all this said, be careful out there. Do not get caught up in the wrong thing. Be PATIENT.

If you would like to contact me for questions or Comments please use Twitter (@BenCBanks), StockTwits (@BenCBanks) or The Contact Me page here on this site. 

 

4-3-2013 IWM 4-3-2013 SPY 4-3-2013 XLF TWEET

Ahhh.. Refreshing – Daily Analysis