| Thursday, June 27th, 2013 | | | | | |
 | | | | Calling an End to the Correction | | | - Caught in the summer selling vortex
- Now's not the time for hope
- Plus: A reader gets a little cocky…
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| | | Greg Guenthner coming to you from Baltimore, MD...
 | | Greg Guenthner | After giving back more than 2% last week, the broad market continues to rally.
Anyone who was caught in the summer selling vortex is breathing easier this morning. Futures are holding steady. The S&P even squeaked back above 1,600 before yesterday's close.
So that's it, right? Correction's over. Shut down the computer and go back to the beach.
Not so fast…
"I'm starting to hear a lot of chatter that Monday was a bottom," writes technician Jonas Elmerraji. "And while it very well could have been, the arguments sound a whole lot more like hope than evidence-driven analysis. The last two days have come with some strong buying in stocks, but zoom out and it all looks a whole lot less impressive. Someone had better tell the bulls that you can't 'hope' the market into action."
After a panicky week, investors now believe the correction is dead on arrival. They say the markets misread the Fed, and we'll quickly go back to setting new highs like nothing happened. Yet despite stocks fighting higher this week, there remains a lot of work to be done before we can rest easy. 
From the May top to Monday's lows, the broad market has endured a correction of about 6%. We've already witnessed the S&P lose 1,600, only to reclaim the round-number achievement four trading days later.
However, what I told you earlier this week remains true. The uptrend that shot the S&P from a low of 1,350 to new all-time highs is behind us. Now's not the time to get hopeful. Instead, let's take a look at what this market needs to do in order to get back on its feet.
First, the S&P has to top its 50-day moving average near 1,620. From there, it has to contend with the lower high posted just above 1,650. That's a lot of work. I doubt the market snaps back with the speed and tenacity with which it fell from these levels just a few days ago.
Remember, we're in no man's land right now. There's a big space between the 50-day and 200-day moving averages for the S&P to wander as it sorts through the current correction. Don't get too caught up in the emotional day-to-day swings of the market. A trend isn't made in a day… | | |  | | | | Rude Numbers | Targets, Predictions and Wild Guesses
| | | | 14,909 | is where the Dow closed Wednesday, an increase of 149 points. The index has now posted a triple-digit move in 14 of the last 18 sessions. | | $398 | buys one share of Apple. Yesterday's drop sent the stock back under the $400 level. It looks like the biggest stock buy-back in history coupled with a massive dividend boost hasn't done much to stop the bleeding... | | $61.7 | billion was pulled from bond funds and ETF's in June. That tops the previous record in outflows from such funds of $41.8 billion back in late 2008. | | $1,232 | is where you'll find gold futures this morning. Meanwhile… | | $18.38 | was the low posted by silver futures late Wednesday. The poor man's precious metal is down 39% year-to-date. | | | | | | | | Rude Trends | When to Buy... When to Sell
| | | "The period we are in now is a shaking out time," chimes in an optimistic reader. "Speculators and traders are being pounded. The future for the stock market is bright and long term investors will benefit. This pullback is at its end and may have already bottomed. If we haven't started the next move up it may only be a matter of days. Gold, commodities and all precious metals are a fool's choice now…"
Feeling a little cocky, eh?
You might be right. But you have to open your mind to the possibility that the market could continue to slip lower in the coming weeks.
Of course, all corrections shake out investors and traders. It's ridiculous to say that "speculators and traders are being pounded right now". The good traders are the ones who cut-and-run early. I would venture to guess that the latecomers from the buy-and-hold camp are the ones feeling the pain. The headline chasers are always buying at the top…
If you really want to outperform the herd, you need to embrace corrections like this one. They set up buying opportunities. They allow different stocks and sectors to emerge as new market leaders. This is the time to take your foot off the gas and plan your next trade, rather than demanding the market to stair-step higher forever.
[Ed. note: Learn how to navigate this market like a PRO today. There's still some time left for you to get started with your free trial of the Rude PRO. But you have to hurry. See my next trade right now…
Send your feedback here: rude@agorafinancial.com - and follow me on Twitter: @GregGuenthner] | | | | | | | Ignore At Your Own Peril | Today's Must Read Links
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