Stay Long & Strong
Similar to August 2nd when coiled up stocks broke to the downside and wiped out more than two weeks of gains, the S&P 500 did essentially the same thing on Wednesday. While it was only a .50% decline, the media turned it into a big deal; it’s not.
Could stocks weaken more? Yes.
Should we be concerned? No.
I won’t be surprised if this pullback is the largest since the BREXIT bottom, but keep in mind that we haven’t even seen a 2% pullback yet. It’s certainly not time to panic and sell. Rather, I would use this opportunity to see which sectors hold up the best for clues of leadership on the next rally, which should take the Dow to 19,000.
Remember when the pundits left the small caps for dead only a few months ago? See what’s been leading? Small caps. Just this week, we saw new highs in small caps, mid caps, NASDAQ 100, semis, software, retail, homebuilders, banks, materials and industrials. While not great, it’s still pretty good. The NYSE Advance/Decline line just scored an all-time high. Bear markets and significant corrections don’t begin with this kind of strength even though the number of stocks making new highs has waned of late.
Stay long and strong. I am off for a day with the family.
This whole controversy with Mylan and the Epipen is fascinating. I plan on writing about it tomorrow. Profits or people first???
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