Friday's plunge was a shock - unexpected and virtually out of the blue.
Most technical indicators were in great shape and didn't warn of trouble brewing.
Key groups (not shown above) were doing well. These included financials, tech and energy.
Many key leadership stocks had hit all-time highs recently.
Tops take time to form, and there are typically tell-tale signs that slowly pop up over the course of several weeks. There weren't any heading into Friday, which makes me wonder if a top really is in place.
I'm thinking further downside momentum could certainly take place early next week, but absent more negative news, I don't think a drop will last long or go far. At least that's what the technicals tell me. This doesn't mean I'm going to be scaling into positions Monday morning. But it does mean I'm reminding myself the move down may be short-lived and I shouldn't overstay my welcome on the short side. Be ready for a bounce. If the bounce fizzles, fine. We may have a bigger down move coming. But for now I'm not looking for a full-blown correction.
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