From Lance Roberts' X-factor Report
This past week’s sell off certainly awoke many market participants that had fallen into the complacent slumber of the Fed driven markets. This week’s newsletter is primarily focused on the technical underpinnings of the market and contained in "Sector Analysis" section below.
However, before I get into that, I want to discuss the current status of the market and the potential impact to portfolio allocations.
As shown in the chart below, the market has held onto its critical moving average since December, 2012 when the Fed initiated its latest liquidity intervention program (QE3).
Importantly, I have noted when the markets have reached short-term oversold conditions (red-dashed lines). For investors, it is always important NOT to PANIC SELL market declines and utilizing some form of technical analysis can help avoid doing so.
There is NO WAY currently to tell if this is just another in the long series of “dips” that we have seen since the onset of QE3, or if this is the beginning of a more severe decline......