After Rocking the Rally, Pros Are Hoping for Stock Pullback
After enjoying a three-month ride off the March lows, Wall Street is now bracing for payback time—a mild retreat that many market experts actually think would be healthy.
Since the market ricocheted off its March 9 lows, Wall Street has been debating when the market would see a pullback and what it would mean.
The pullback has been seen as an inevitability, but hasn't happened yet due to a number of factors, in particular the breaking of technical levels that has prevented the averages from taking any major dips.
Recent events, though, including gyrations in the market for US Treasurys and concerns over inflation, has lent more credence to the notion that a pullback is looming ever closer.
"We're in this cross current. There's still a ton of money on the sidelines. A lot of professionals don't believe this rally is true," said John Buckingham, chief investment officer at Al Frank Asset Management in Laguna Beach, Calif. "A retest of the lows from here would be an awful downturn. Even if you had a 10 or 15 percent downturn that would hurt."
"From a short-term perspective, it's anybody's guess," he added. "If I had to be a betting man on the near term I would say we're due for a modest pullback."
The 10 percent or more figure seems to have the most traction on the Street; Standard & Poor's chief investment strategist Sam Stovall earlier told CNBC he thinks a 15 percent pullback is in order "before I can breathe a sigh of relief and believe we're headed higher again."
A modest pullback, then, would be seen as a sign that the last three months have constituted not merely a bear rally but constructive steps toward forming a bull market.
Market pros are citing a variety of reasons for the impending pullback, from continued weakness in employment to uncertainty on government policies to simple gravity--what goes up eventually must come down, at least to some extent.
"Would you want to buy a stock now after a 30, 40 percent move? What's really changed?" Dave Rovelli, managing director of US equity trading at Canaccord Adams, told CNBC. "The credit market has eased obviously, but at the same time oil's going higher again, on it's way back to 80, 90 dollars a barrel...We have a lot of things we're not sure of."
Rovelli believes the market will draw a line in the sand when the Standard & Poor's 500 approaches 1,000.
Indeed, psychological as well as technical barriers seem to be more in control of the market than fundamentals these days.
Wall Street continues to rally on news that might otherwise be considered negative, while occasionally retreating at various resistance levels that can seem arbitrary to the casual observer but are very real to those in the pits.
The indexes were lower Thursday as oil prices continued their march higher, worrying investors that consumers would slow their spending habits.
A natural and perhaps less violent pullback may have happened sooner, but the indexes were propped up after more and more stocks began eclipsing their 200-day moving averages, a point the S&P passed last week for the first time in nearly a year.
Remember when we started this move they we afraid of the downside and now they want in on a sell off. Get the wording of the article...a mild retreat, a modest pullback...now that is not scary is it? Plus as an added bonus There's still a ton of money on the sidelines. How could it be that bad, alrighty then.
The verdict is still out until we either "breakout" to the upside with volume or sell off 10%. I still have only placed limited bets shorting Silver, Gold and China. I have not yet shorted the market. If we get a 10% sell off and they tell us to buy I will start shorting the market. For now I am 7% short 93% cash and waiting for the game to begin. I am itching to get my hands on oil short but have only a tiny position in the DUG (Oil Index short)
The beat goes on.... Mikey
No comments:
Post a Comment