Friends
The unrest in Libya finally broke the uptrend in stocks today. Stocks fell early in the morning and continued throughout the day with the Dow Jones Industrial Average ending down 178 points (-1.44%). As would be expected, oil and gold were both up big for the session. As we sarcastically pointed out on Friday, this market was overbought and looking for a reason to pull back. Is this just a healthy pause to a market that desperately needed one, or is it the beginning of a more serious downturn? Given the solid earnings season just passed and economic news such as improved consumer confidence (today’s number was the best in 2 years), we still see the domestic situation as improving. The macro situation, specifically Libya today, and its effect on oil prices should give all of us pause for concern, as higher gasoline prices are not what this economy needs right now. As we have pointed out for months, a tug-of-war exists between an improving domestic picture and a seemingly never-ending overseas circus.
Traders have whined continuously over the past few months that this market will just not give them the opportunity to get in. Day after day, the stock market worked its way higher and the frustration grew. Today, we finally got a serious sell-off. Will the underinvested bulls take advantage of the lower prices to buy, or will they pull in their horns and wait to do battle another day. Finally, the bears will have something to crow about on the financial television shows. The bulls have been the featured guests for months now, but don’t worry, the doctors of doom will get their face time now. Remember, bull or bear, everyone is just “talking their book”.
We will watch to see how the week unfolds before making any bold proclamation. As quality stocks get sold, we most likely will become more interested in increasing our equity exposure. We will be watching for companies that just reported great earnings and see good quarters ahead. As always, looking for opportunity during the turmoil. We will keep you updated as the week unfolds.
Have a nice evening everyone.
