After a quick little bloodbath on Wednesday, stocks saw a feeble bounce on Thursday with another rollover to the downside looking to be the case on Friday. I would be shocked if Wednesday was the low to buy for a run to new highs. The most likely scenario has stocks making new lows for the week and that spills over into next week. This should be the 4-8% pullback in Q1 I have written about so often.
I can only imagine all the articles, interviews and social media posts this weekend about Gamestop, Robinhood and short selling. When the politicians get involved, you know there is a populist movement going on. I am sure people will lay blame with the whole Gamestop fiasco as reason for stocks to go down, but that’s just an excuse.
Let’s not forget that there has been an epic amount of greed and euphoria in the market since November, worse than last January, January 2018 and January 2017. However, until recently, the stock market’s foundation has been strong. Air pockets exist beneath the market and one is being hit now. This is absolutely not the end of the bull market.
I find it interesting that some folks are behaving like the decline is something big. The stock market was at all-time highs on Tuesday. A few percent pullback and people are concerned. That’s crazy and why there should be another leg higher after this pullback ends. When the Dotcom Bubble burst the masses were buying the dip the entire way down in 2000 and into 2001. Every few percent you heard people pounding the table to buy. Today, you have people becoming concerned after a one day decline from new highs.
