BUY OR BYE

The markets turned south last week mostly Friday and started some big sell off across the board. The SP500 -2% suffered the worst one-week percentage decline since June 2012 and DJIA plunged -1.9% and took its worst week since November 2011.

So far this year the S&P 500 has lost 3.1% and the Dow is down 4.2%.

Is it a new “Buy the Dip” opportunity or beginning of a bigger correction and we have to say Good Bye for the bullish markets? It is too early to say yes or no. We have to see some days the correction continues or rebound the indices. These deep losses teach us again to be humble with Mr. Market. Recently everyone is scared about the big fall because we were super optimistic about the bulls and we couldn’t imagine any big correction by now has arrived.

What happened so far this year? The total opposite which was agreed. Mr Market goes against the consensus:

• SP500 -3,1% - consensus was super bullish
• Gold +5,5% - everyone was bearish
• Eurostoxx -3,3% - everyone was bullish

To put in bigger perspective than last week in 2014 the US indices has been just ranging around the tops and couldn’t make any break out further. They lost the momentum. The SP500 three times tried to close above 1.850 without success this year. Finally, the correction took out the 1.810 key support level and now the price is around 1.793.

The BFM Assets Team.