Friday, January 24, 2014

Buy the weakness

Markets have moved in a broadly sideways fashion since my targets were hit. I think this reflects the fact that positioning and sentiment had gotten extremely bullish into year-end, too bullish I would say, and with less than stellar earnings and economic data emerging since Christmas we are (so far in January) having to work off these extreme overbought conditions. 

I suspect there may be a little more to go over the next two weeks or so, but unless we see a weekly S&P close below 1800 – which I doubt – I expect this slight weakness to pass. It should instead be considered a tactical buying opportunity.