As I watched the financial media last week, the debate seemed to center around what to call this market. Some say it's a pullback, some say its the start of a 10% correction, some say it's a buyers strike. I guess a correction is worse than a pullback, but not as bad as a flash crash, but a buyers strike is cool. It's kind of like the White House not calling what's going on in Egypt a "coup". Was it an "ouster"? At the end of the day it just is what it is...on both topics.
Stock prices correct in two ways, price or time, meaning a pullback corrects overbought conditions, but sideways action is also healthy, as it can work off some froth. Under the latter scenario, stock prices don't necessarily have to get crushed. From mid July until about last Wednesday we kind of stayed in a fairly tight range, working some excess off through "time". Then prices hit a bit and psychology changes.
Two weeks ago I watched respected technical analyst Ralph Acompora get as juiced up as a bull in a china shop. I believe he said Dow 20,000 and "don't worry bout anything". Some of you may remember the interview. I also saw him Friday saying to take profits and that we were probably in for a 10-15% correction.
What's that all about? First of all, its always ALL about time frame. If you got juiced up over Acompora's initial bullishness, and acted on it, you bought the top. Ralph has a three year target, maybe two years, so that doesn't mean the market cant pullback 10%, still making him right as rain on his call. It's all about time frame.
Th bears are coming out of hiding now, as is expected. My pal Greg Harmon (http://stocktwits.com/harmongreg) on Stocktwits actually had a chart of the amount of negative tweets by Nouriel Roubini. They are way up since the market has cracked a bit. But that's the market and this kind off stuff will never change.
On Wednesday the fed minutes are released and every vowel will be scrutinized with an electron microscope. The market will get over higher rates soon. We're just getting repriced..................again.
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