Posted on June 17, 2009 - by kevinscully

It looks like the long awaited correction of global equities is finally here…

Photo by pshutterbug

..my strategy during this period

After about a 100 days the early March 2009 rally which pushed markets to very over-bought levels finally seems to be pausing for breath. The long awaited correction or consolidation is good as stocks have run ahead of fundamentals pushing the market from a very under valued to an over-valued scenario. The 60 point correction in the STI yesterday was broadbased but on low volume with penny cap momentum stocks bearing the brunt of the losses.

The catalyst for the correction has been on the cards for some weeks but it seemed that investors were playing “chicken” because many had missed or entered late into the rally and didnt want to be the first to take profit on the chance that there wouldnt be a meaningful correction. A switch back to US$ assets, a rise in long bond yields seemed to see liquidity shift back to the US$ causing weakness in both commodities and stocks.

Overnight the Dow and the Nasdaq shed 187 and 42 points respectively to close at 8612 and 1816 amid weakness in commodity prices from a stronger US$. Like Singapore, the weakness was on lower than average volume. Read more…

Related posts:

1. Singapore market is technically oversold according to the RSI…..but will there be a meaningful correction in the coming weeks?
2. Where is the correction?
3. Time to show and tell for US and global financials…