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Expect a Near-Term Correction, but Only Minor
By Mike Paulenoff, MPTrader.com

We're taking the end of the week as an opportunity to look at the market on a near- to intermediate-term basis. First looking back on the week, a very interesting situation has developed. This week you made a new recovery high from last March in the E-mini March S&P at 1155, and the markets traded between 1150 and 1155 until the Fed on Wednesday afternoon came out with its latest policy statement. We all know it changed a few words and the few words definitely changed a few perceptions of how safe it is to be long some stocks at levels that are, in terms of the S&P, are almost 50% higher than they were since March 2003. So some people decided that even if the Fed doesn't intend to raise rates anytime soon, just the idea that they're preparing for it is enough to put the kibosh on some stocks after a 50% rally.

When the Fed met on Wednesday the S&P had pulled from 1155 to 1140 ahead of the announcement. Then it plunged below 1140, which triggered a move to 1120. That's important technically because when it broke 1140 it also took out the trendline from the December 10 low at 1053. That's the first trendline break we've had in a very long time. And this one, in particular, was about a six-week trendline, so it's significant.

Not only that, it broke down into the rising 20-day moving average, which is at about 1125-26, and broke below it. But as we speak now on Friday with an hour left in both the session and the week -- and in the month for that matter -- the S&P is trading at 1130. So it's trading just above the sharply rising 20-day moving average. This is important because the position of the moving average, the angle of ascent, vis-

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