RED DAY ON US MARKETS

Yesterday on DJIA we had the biggest daily drop in the last four months, since 20th September. Dow was falling in four straight session. Was a great sell off in Europena markets too. Is it the beginning of something or another „buy the dip” option? Who knows.

My bet is only a good new option buy. Why?

I have 5 reasonable arguments:

• On the markets not yet started the public speculation
• The sentiment is still bullish but not euphoria yet
• The fundamental conditions are still good and look very promising the future – US unemployment is 6,7%
• Technically I see a break out pattern
• Before the market does a rally always need some consolidation

In my view this pullback is only part of the business because we should be aware again the cycles is behavior of the markets. But I don’t think so the market generally are stretched.

On SP500 might make a correction down to 1.811 and if taken the 1.844 gets back in the bullish track again.

Dow correction could hit the 16.125 level and is going to be bullish again if the key resistance level is taken at 16.440.

The BFM Assets Team.