Long OVERDUE correction is at hand.

I have been away from blogging due to personal reasons and for those who have been checking, I will be back to devote time to this blog.

The market began its long awaited correction last Thursday after the bond yield finally began mattering to investors. The ten year treasury has now inched up to 5.25% in yield stirring fears of FED rate hikes and higher cost of borrowing.

I think this correction is healthy and much needed. While the action is swift and painful to many, the signs were there to raise cash during the past two weeks. The NASDAQ ironically was signalling the impending correction just like it had signaled the follow through day when it gave three distribution days in a row two weeks ago. Now the bears are in control of the market and my recommendation is to go to cash or hedge your long positions. I do not recommend buying puts or shorting the market because this correction is still within the context of a strong uptrend meaning that it may snap back and cause huge losses on the short side. Let the hysterics play out.

The bond yield issue is not a major issue. It is a byproduct of the market being frothy and over extended. I think a few more days like today will complete the correction that will refresh for the next leg up. Economically, the strong news is a welcome event and should be embraced as this shows that our economy is robust and healthy. Once the bond stops mattering, I believe the market will be ready to resume the next phase of the leg up. I believe we are in one of the strongest bull markets in a while. Stock valuation still remains compelling. A new dose of fear is good for this market because we will have a new wall of worry to climb.

good luck everyone!