How Severe Will The Market Correction Be?

Wednesday, October 14, 2009

This is the price graph of this recent run up on the S&P 500 Index. The stock market moved up more then 120 points in 17 trading session without any pullbacks. This is obviously prone to a correction that can be soft or pretty severe. If the market corrects a third of this move, it will trade down to 960. That is my target for the next few trading weeks.

Yesterday I picked up Fooled by Randomness the magnific book written by Nassim Taleb. I underlined this passage that I think its particularly interesting, "over a short time increment, one observes the variability of the portfolio, not the returns. In other words, one sees the variance, little else". Off course we are traders and we are used to attribute meaning to every single price move, to every single trading session. Sometimes its important to gain some perspective.

Have a nice trading day.

Petroleum Oil Gas info Blog is a website for active online futures and stock traders. I will provide my real time trading decisions and my market thoughts on this webpage.


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