February 28, 2012 Leave a Comment
Taking the Road Less Traveled Makes ALL the Difference
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They Tried to Fall!
2/27/12
Interesting – oil price increases were the cause du jour of today’s 20 minute stock market correction. In no time, the hyper vigilant “buy the dip” crowd of 2012 was on it, as 1% losses (give or take) were reversed and stocks were up in no time.
The markets ended flat BUT, many fast growing stocks still rose today (including some of the high fliers I mentioned last week). The quick reversal and strength in the growth leaders tell me that there is no change in the current bull trend.
Could a Correction Be Near?
I could see a couple of correction scenarios – both likely short: one is a medium paced fall of 6-10% over the course of 2-4 weeks with the Nasdaq touching back close to its breakout level of 2737 (did you notice that the Nasdaq is one Apple orgy day short of 3,000?) before resuming higher. Another is a “flash crash” type that quickly scares out many tepid holders of stock, with a fall of 8-12% in a day or two taking 2 weeks to get back to pre-drop levels and a resumed uptrend.
Either way, it may serve us all best not to use data from any partial day period as anything to go on. Again, drops feel bigger than they are – today’s AM drop felt bigger than it was but either way, it was soon gone.
The Action
Precious metals were flat with gold stocks slightly down. MLPs were flat, MO, JNJ and WMT didn’t move much (WMT’s ~0.56% down move maybe qualifies as notable. Large cap tech wasn’t exciting either except Intel which rose over 0.7% (again if you can call that exciting). Long bonds (TLT) moved up almost 1%.
Summary
Today told me that the BTD – buy the dip – crowd is just fine and that there is big money waiting to move in. A large correction, as mentioned above, might correct so fast if it happens BECAUSE there is a large pile of jealous money on the sidelines in this market.
Watch your trading plan!
At the time of this writing, I or my clients own the following investments mentioned in this column: Gold, Silver, GDX, GDXJ, AMLP, MO, IBM puts
Note: this article is meant to be some helpful thoughts to share and not investment advice specific to you. Please consult your own advisor regarding investment and financial decisions. See our disclosures page
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