Down Market Was Predicted and it Finally Happened
Back on February 7th, in my post labeled Markets Marking Time, I said:
Every month that the market moves forward gives me more reason to be less bullish. I am still cautious going into Feb and March and I recommend investors lock their gains before the selling hits – the market has to correct 5% or more before I can get all-hands-on-deck bullish.
Back on that day, the Dow hit 12749 before closing at 12666. Today, a little over 3 weeks later, Dow closed at 12114, down 4.4% from the levels where I advised profit taking. The Nasdaq is down even further, down 4.9% .
While I was right this time about the market direction, I was wrong about it from September through January, where on at least 2 occasions, I cautioned readers that the market had run up too much too fast. Just want to put that out there so you don’t think I highlight just my good calls.
What happens next? I mentioned yesterday not to trade this volatility and I maintain that you need to build your shopping list. Don’t go shopping yet, but start getting excited about the prices that you will be able to buy your favorite stocks at. I expect further declines, but I am already feeling giddy at the prospect of buying Goldman Sachs (GS) at under $190, NYX and NMX at $80 and $116 respectively, Transocean (RIG) at $74, Yahoo at $30 and Activision (ATVI) at $16. Understand that some of these targets might not even hit, but so what. Some of them will be hit and the stock might retreat further. In such cases, I would buy more.
– Faisal Laljee
Full Disclosure: I own YHOO for my portfolio but my position might change anytime without notice.