I posted Tuesday about the upcoming market correction for 2011. Typically these corrections are said to begin in May. I gave some evidence that it could begin as early as this month. Last year, the first signals of the Spring correction came toward the end of April with confirmation into May. After posting this, I got several hits that were from first page Google search results about a 2011 market correction. This being said, I wanted to add some commentary and information as all of this develops.

First point I need to make is that while we have seen a fair amount of evidence to believe that a market correction is on the horizon, we have yet to see any confirmation play out. As a trader, this makes me wary of the markets' current strongly bullish postures and their longevity, but I'm not exactly running for the short hills as of yet. The Dow Industrial Average declined slightly on two consecutive days (Monday and Tuesday) on slightly below average volume. This appeared to be a weak reversal signal especially combined with the bearish reversal clusters formed in several time periods on all three major indexes. But given the strength of the bullish posture of the Dow, I want to be careful not to jump the gun on the reversal either. Else I'll lose money that I'll have to make up once the trend does reverse.

If you look at the candlestick for 2/16/11, you will note that the body of this candlestick engulfs the bodies of the previous two down days. This does the opposite of confirm the reversal signal. It negates it. Furthermore, it did so on more volume than the previous two days. The volume change was less than remarkable, but it further weakens the previous reversal signals.