The markets took a beating today and sold off in size not seen since 2004.
Despite the fact that we have quite a bit of cash on the books, it just
never is enough during a wash out such as this. Ever more discouraging was
this move after such a promising previous day, but it always is important to
remember that the only one in charge is Mr. Market and what he says goes.
Rational or irrational it doesn’t really matter.
A broad sweep of the Shark HQ indicators all show weakness. Breadth was over
2-1 negative, volume was heavy, and sectors we would like to see with a
pulse, stuggled for life all day. The S&P broke key support levels today and
put us in a confirmed cautious mode. While we have been looking for some
profit taking and consolidation, today’s move was definitely more than we’d
hoped for.
The stories for the day seemed to be Oil and Google. Oil, which is once
again flirting with all time highs seems to have many spooked and a theory
regarding an advertising issue seems to be brewing at the beloved GOOG,
knocking the stock into free fall.
While today’s move raises the caution flags, our feeling is that today’s
selling simply doesn’t feel like the start of a prolonged down trend.
Furthermore, with the extreme at which we sold off today, the probability of
an oversold snap is increasing considerably.
All and all, we didn’t do much of anything today. We still have quite a bit
of cash on the books and the fundamental reasons we purchased positions
remains the same. We also spent some time today working the phones and
checking into some of our favorite stocks. It is often during times like
this that many will throw the good out with the bad. Stocks that have been
sent into a death spiral are typically the first to snap once the air clears
and dust settles.
What once looked to be a relaxing weekend basking in profits, will now be
spent digging into names, checking ideas and searching for stories. While it
takes work, after a trading environment such as this, those who have done
their homework will quickly recoup any losses they’ve suffered in rapid
fashion.
Have a good weekend, rest up, and be ready to rock and roll on Monday
morning.