Is it the usual play or something more sinister? . Last week I wrote that we are coming closer towards the pointy end of making a bottom towards the end of July. We still have few days to go. I have been talking about this low since mid-may, saying we will top end of May and bottom end of July. But that was based on "normal" play. What I mean by normal is that general markets, even if they are not increasing, they are not in big drop mode. In my weekly report last weekend, I wrote that general markets are easing, may get into correction - drop of 10+%. The good play would be pullback - 2/5% drop. As of yesterday, SP 500 has nearly dropped 5% from its high. So we are at a crucial juncture. If we drop more in general markets, I feel the July end bottom we may have to wait. Markets to stabilise before we feel we have bottomed. . In mid-May when I wrote what the bottom would look like, initially I wrote that a 30/40% from its high. Few weeks back I revised that saying the drop could be closer towards 50% for some stocks. SLX has come down from 675 to 450, exactly 33% drop. So back to 675 would be 50% gain. Incredible, just in few weeks. But its also in track with what I was thinking, in range of 30/40%. Why such a big drop? U sector is volatile and these rises and falls are not unusual. For long termers, I feel macro is still good. But I follow price action, trading patterns, so my play is slightly different. Its individual risk/reward, there is no right or wrong.
One other thing I have been writing is that CCJ will drop to 45 - saying that over 2 months. Yesterday it reached 43.57. Yesterday it closed at 44.58. It needs to hold here, otherwise, 39/40 for CCJ is in play. It will drag down most U stocks with it. So lets hope it holds. . SLX had a very good rise since March. Its given back a lot, but much better than say last year. It just shows that most U stocks are not immune to the vagaries of the sector. Hopefully we are getting closer towards bottom, maybe next week, but general markets have to behave. All the best.
SLX Price at posting:
$4.55 Sentiment: Hold Disclosure: Not Held
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