Thrills of Victory, and Agony of Repeat
Yesterday, investors got a taste of what a powerful one-day rally looks like. With major indexes up 7%, we hit more than a few historical highs. It was the fifth biggest one-day rally in the Dow, biggest rally in five months, and it capped the best 10-day streak since 1938…
It was big. But why the long faces? Because the market is down… Many are asking why the market is pulling back today.
Profit taking is a natural part of big up days like we saw yesterday. In normal markets, you will see a slight pullback as traders pull some of their gains off the table. This up down cycle happens over and over again during a bull market climb.
It’s the reason why people refer to the market as a roller coaster, and why for ever thrill of victory, there is some agony – and repeat. We’ve seen this before, and we’ll see it again.
But today’s “defeat” doesn’t mean we’re done with our bull market.
As we discussed a week ago, the S&P 500’s (.INX) bull market point is 811.81. Once passed, we are in a bull market until the index plummets more than 20% – from the high. So even if we pull below that mark today, we’ll still be on our way up.
Which means that if you’ve been on the fence about getting back in, you’ll have only a few other opportunities to do so before it’s too late.
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