Via Reuters
That has been one of the questions since the heavy falls in US stocks. It is not hard to see why from a technical perspective the recent falls bear the hallmarks of a deeper slide. Take a look at the Nasdaq.Firstly, the range of selling. Three days of selling from 03, 04 and 08 September (remember labor day holiday) saw price erase around 14 days worth of buying. Secondly, the break of June 29 and July 24 ascending trend line signals a deeper correction.
Many in Wall St see this as a correction, not a deeper slide
However, many in Wall St see this as a simple correction. Here is a sample of the views from a Reuters piece yesterday.
- Goldman sachs reiterated its year end price of 3600 for the S&P500
- UBS Global Wealth Management recommend clients 'ease into the markets' rather than stay on the sidelines
- SkyBridge's co-chief investment officerTroy Gayeski see this as a 'healthy correction, removing the froth'
However, with the November elections on the way not everyone is so optimistic.
- Stanley Druckenmiller warned that the stock market is in a mania fuelled by the Federal Reserve.
There is no doubt that the Fed is keeping these markets supported. However, how long can this continue?In these kind of markets take a look at key technical levels to assess what is going on rather than trying to second guess yourself. Are key moving averages respected? Does prices slice through support? Does the sell off extend from the tech sector to the broader market? Essentially allow the technicals to guide the way through the question of whether this is a correction or a deeper slide. Seems the sensible option.
