The long term uptrend in the market is still intact

This Rally started in late December when the Fed made a decision to increase liquidity because of the European crisis. Now the Fed has indicated that it may not have another round of quantitative easing, this has caused the market to show signs of correction. The technical price action, even before the Feds announcement, was showing that the market was due for a correction.

The small cap stocks had gone into a basing mode since early Feb 2012. The big cap stock indexes were doing better because of names like Apple (AAPL) and Priceline (PCLN). The Feds action may act as a catalyst to send the big cap indexes in a correction phase.

The underlying price action on a number of growth stocks still looks good. This means that it is more likely that we may have a short term correction in the market, setting it up for another leg up after that. The long term uptrend in the market is still intact.


Market Breadth Ratios are indicating a Short Term Correction (STC).