Is A Correction Too Predictable?

Many of my indicators are suggesting we’re due for at least a correction and possibly the resumption of the down market.  About 75% of the stocks on NYSE are above their 40-day moving average, the S&P 500 is at a place it has typically rolled over, The percentage of stocks above their 10-day moving average has been falling showing that fewer stocks are participating in this run, and the supply/demand picture is still very weak.  All of that adds up to a correction.  The problem is I think it’s very anticipated and we have a Fed decision tomorrow.  When things are too obvious in the markets, it tends to go the opposite. 

If we get a blowoff top meaning a big up day on heavy volume, that will really suck the bulls in and cause the shorts to run.  That will be the time to execute on putting more shorts on.  On the other hand, if the sell off from today spills into tomorrow, I will more than likely take some long positions off the table and raise more cash and lower my beta (how much I move vs. the market) which is already pretty low.

Stay tuned.

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