Heading for Downside Targets ... as Expected
In Monday's special column, "My Take -- Victory is Obama's," I made a couple of predictions. First, that President Obama would win and that he'd get at least 290 Electoral votes. That one wasn't so tough to figure if you just looked at the available information. From the reaction I got (mainly from the fact-free zone), you would have thought I was saying that Martians would land this week. The other forecast that I made, which I've been reiterating since September, is that the market would sell off "on the news" after rallying for months "on the rumor." So, the market is selling off. No big shock.
I highlighted a couple of downside targets for the pullback. The first one, the .382 retracement of the rally off the June lows in the S&P 500 weighs in at 1395 and that was easily exceeded Wednesday. The second one still hasn't been tagged and I suspect it will be before this shakeout is over. That's the 50% retracement of the rally off the June lows and it occurs at exactly 1370.63. The low so far of 1381.28 (as of 1:30 p.m. EST) has been within striking distance. I still am allowing for a pullback to that level, and, if it is seen, I will add to my positions. Just for the record, that doesn't mean I will be 100% long at that level. I am currently invested up to a maximum of 55% (I added to positions Wednesday after selling into Tuesday's pop). If the S&P 500 reaches that next downside target, I may increase my exposure (in the Aggressive Growth Accounts) to 65%, depending upon the action....399 more words left in this article. To read them, just click below and try Real Money FREE for 14 days.
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