While yesterday was an official travel day for me, I was able to stay on top of the market action. For the most part, the markets were nonplussed for the first half of the session. Then, after Atlanta Fed President Dennis Lockhart said that he supports further reduction in quantitative asset purchases (i.e. tapering), the markets took a tumble. Some believe that the reaction was also a delayed response to Friday’s disappointing jobs number. To be honest, a 1.26% decline in the S&P 500 (SPX) which traded in a 1.52% range is nothing to get worried over. The 2014 New Year’s pullback stands at 1.62%, again nothing to lose sleep over.
A Goldman Sachs’ (GS) analyst predicted a 10% market correction assigning to that prediction a 67% probability. It would be naïve to think that the markets would not incur some sort of correction of 5 – 10% at some point this year. I believe that is likely to occur. That being said, it is a fool’s errand to pinpoint when that would occur. Embrace such possibilities but do not bet on them. It does not hurt to raise some cash. Recall that in My Gut Feeling For 2014, I was expecting a back-ended year.
Today the markets will focus on earnings form JP Morgan Chase (JPM) and Well Fargo (WFC) rather than apocalyptic commentary from analysts or economists.
Disclosure: At the time of this commentary Scott Rothbort, his family and/or clients of LakeView Asset Management, LLC had no positions in stocks mentioned — although positions can change at any time.
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