The S&P 500 slipped for the fifth consecutive session and Monday’s losses were the worst yet. That said, this -0.8% “tumble” still leaves us little more than 1% from all-time highs. (Hardly panic material.)
As boring as the market has been the last few weeks, things have started getting a little spicier:
Last week I said this recent bout of selling wasn’t meaningful and Monday’s loss doesn’t change my mind.
While this selloff could be the real deal, odds are strongly against it. If something bounces two dozen times and it reverses only once, what is the most likely outcome of any individual occurrence? As obvious as the answer seems, every time prices slip from the highs, people reflexively start calling it a top.
While these naysayers will eventually be right, like a broken clock, they will be wrong dozens of times first. Is this the one time they get it right? Probably not.
That said, I’m not willing to ride this one all the way down if I’m wrong. I have clearly defined stops in the mid 3,800s and if the market falls to those levels, I’m out, no questions asked.
And you know what, I actually hope I’m wrong because a larger pullback would create far more profit opportunities than if this is just another minor dip and bounce.
I’m holding for higher prices until my stops are hit. And if I’m wrong, even better!
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Jani Ziedins (pronounced Ya-nee) is a full-time investor and financial analyst that has successfully traded stocks and options for nearly three decades. He has an undergraduate engineering degree from the Colorado School of Mines and two graduate business degrees from the University of Colorado Denver. His prior professional experience includes engineering at Fortune 500 companies, small business consulting, and managing investment real estate. He is now fortunate enough to trade full-time from home, affording him the luxury of spending extra time with his wife and two children.