aus dem Hause ZACKS:
Buy The Dips! Buy The Rallies!
The markets soared yesterday. After logging one of the worst weeks in 2 years last week, the Dow on Monday put in its 3rd highest point gain in history.
The last couple of months have been an extreme exercise in volatility. But day by day we are coming closer to the end of this correction / consolidation. And when this passes, an upside breakout seems like the next step given the increasingly bullish economic numbers.
According to the news, the market plunged last week 'supposedly' on renewed fears of a trade war. But they rallied yesterday 'supposedly' on ideas that trade concerns were easing. Let me be clear, the same trade concerns that existed on Friday existed on Monday. I'd even say they were escalated to a degree after China said they would be initiating new tariffs of their own. But it was never as bad as the media made it out to be.
I point this out because the tariff-talk in the media doesn't match the actual news on the ground. And too many people are getting spooked out of the market due to the knee-jerk, over-sensationalized 'reporting'on this topic and others in a desperate attempt to explain the market's pullback. But they keep getting it wrong.
(Remember just a few short weeks ago, the correction was 'supposedly' because of inflation concerns and the prospect of an accelerated series of interest rate hikes? That was nonsense from the beginning and the Fed quickly put that to rest at their last FOMC meeting.)
So yes, the market has a right to be concerned about the impact of tariffs. But the word 'trade-war' was being bandied about recklessly and only served to create unnecessary panic. We will have to see how the tariffs play out. But I contend the correction taking place is normal market behavior. Profit taking and position squaring after a spectacular two-year rally amid record low volatility, finally gave way to the natural ebb and flow of the market.
But make no mistake, the current correction will make the market stronger and create a brand new base from which the market can begin its new leg up.
Buy the dips! And buy the rallies!
See you tomorrow,
Kevin Matras
Executive Vice President, Zacks Investment Research
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