The current stock-market correction is still very questionable, and there's a higher risk to being heavily invested in stocks right now. Trading remains more random than not, and driven essentially by the news headlines of the day. For now, protection of capital is key.
The sell-off today and last Tuesday deserves close attention. We believe for a number of reasons that we are at a "Stop Look and Listen" point in the market. What I mean by this is that we are at a higher probability point where the market will begin to pull back.
It was a bit of a roller-coaster trade in the stock market last Thursday, but when it was all said and done, the stock market resolved its affairs in much the same way it did in the first quarter. That is, it saw the downswing as a buying opportunity and ended the session on an upswing.
The catalyst for yesterday's broad-based rally was the better-than-expected Q3 GDP report. The report itself looked good at first glance, but if you take away some of the cosmetics--namely government stimulus---the seemingly beautiful GDP report looked a little less appealing.