A week can change everything

We experienced the biggest sell off week in the past 5 years history, and many folks have been extremely waiting for bottom fishing. Sorry for my being absence for about one week before last on vacation which took me about one week to figure out what was going on the market. Let's take a quick review back onto those titles on the journalism again,

last week,the biggest titles include:
1. DOW hit record hight 14000
2. By year end, we will hit 15000
....

Seems everyone was extremely bullish for the mkt. But we have pointed out before, the rally we saw few weeks ago had not been confirmed by all the leading sectors previously. And the last run rally didn't come up as anticipated and directly jump into a correction. To make it simple, the sold off means that we probably will get into a relatively longer than anticipation correction period. I don't need to emphasize the chart here because all the charts can be read. But we need to understand what cause the reason to sell off the market. In my mind, those reasons include the following ones:

1. mkt has been waiting for an exclusive odds which is that we have a strong economy growth while the FED will has a rate cut. The energy sector soared previously due to gas price soar and eyes for stronger than expected economy. If we had good economy, can we expect a quick rate cut from FED? No, but that is what street hope for, and they will have nothing eventually. This is why we pointed out before we may get into a bear mkt after this last run of rally.

2. Shorter have covered most of their short position the week before last which mean the mkt is overheat at that moment. From a contrarian point, we should be cautious. I also made a mistake by leaving for vacation while keeping my account without watching. The sell off time came earlier than what I thought. The good thing is that I came back:)

Getting into the mkt itself, we will need to find out what sectors got hammered last week. If you pay attention enough, will find out that Energy sector, Finance sector got their biggest cut. Woops, doesn't that mean sth? The subprime woe has been there for quite a while and why should they react at this moment? Once you got the answer, could easily determine what strategy you could use. Do we see hope? yes I think so. Tech sector still outperform most of the sectors especially from the solid fundamental. AAPL,WFR,SNDK, AMZN, QCOM, BIDU, VSEA... all reported solid earning that support the hold-up of semi/tech sector. If mkt rebounce, they would be the first spot to indicate.

Strategy point of view for the next week
Mkt has got into extremely oversold area that could lead to a rebounce starting at the beginning of next week. But rebounce is rebounce, don't be fooled by holding your position longer after witness the possible rally. It would only be a time to reduce your cost and pls take your profit quickly. The force analysis between bull and bear currently implies a stronger force on the side of bear. Trading against the force could lead to mistake or huge lost eventually. So next week, cut your loss or take your profit asap when you see mkt rebounces. At the end of the week, if mkt rally more than 300 points, buying put or short will be a good consideration.