Where Will You Be When The Correction Really Happens?

It is quite obvious that the market is down today. This may be a shocker to most, but the market can trade down and will. Not only that, but the ammunition for trading lower is by no means in no short supply. Everything from U.S. housing to a weak global economy are bullets in the gun to this potentially bearish market. What concerns me is not today, tomorrow, or the next week. What concerns me is the day when we have completed a so called correction. On that day when the market is finally down 5%, 7%, 10% or more, one must ask, will I be a buyer?

It is always good practice to buy things when they are cheaper. As traders and investors we buy stocks that we think will gain value in the future, this is why we buy on dips or in places we see bargains. That being said, would you buy after this correction, when and where it occurs? When evaluating this question, we must think about one thing, and one thing only; Why is the market trading down? If the market is trading down because its gotten to big for its britches, that is understandable. If the market is trading down because profit taking is occurring, that is also understandable. If the market is trading down due to economic concerns here and abroad, then one should be very concerned. For quite some time the U.S. has not been correlated with the economies of the rest of the world. When this correlation resurfaces, only fools will be the one buying the dips, or calling the bottom. If you are bargain hunting, be leery, what you can get today for $10 you may be able to get tomorrow for $5.

Posted on by Young Gun in Uncategorized Comments Off