The stock market officially went into a correction yesterday. It’s now time to build cash, then reinvest in the stocks you want if or when they go on sale.
Long Awaited Correction
It’s been a long time since the market went into a pullback. Mid November was the last last time the market was down. Since then its been up, up, up.
I’ve been waiting for some sort of pullback since February. That’s a long time to wait. I think the longer the rally the longer the correction, thus I feel this correction could last a bit.
WE are in the beginning of a correction. If we are going to sell stocks, this seems like the time to do it. I don’t want to sell if the market goes down 10% (and my stocks go down 20%).
Investors Intelligence
The weekly Investors Intelligence reading shows lots of optimism among investors. This reading is negatively correlated. If people are too bullish the market falls. If everyone thinks the market will decline, it goes up. Right now the reading is very bullish compared to that November correction. This is another clue that we could be in for lower priced stocks.
Sharek’s Take
The correction just occifically started yesterday. Its still young. Since the trend is our friend and the trend is down, we should sell some positions to raise cash, then buy the stocks we want if we get better prices. I feel a lot of stocks were fairly valued a week ago. I want to buy a handful of names, but want to get them at a discount. With this correction, I just may get my wish. Build cash.
