Yesterday, several reasons caused the major indexes to head south at first, but a last hour recovery limited the potential damage and actually pushed the S&P; 500 to its best close of the year.
News reports that Moody’s is warning the U.S., along with several other industrialized nations, that their pristine AAA rating might be in jeopardy if they don’t get their fiscal houses in order did not sit well with the market.
This was followed by concerns that China may need to boost interest rates sharply in order to contain inflation. Speaking of China, the technology sector pulled back on reports that Google may be pulling out of this country all together because of extreme censorship.
My point is that no one can be sure whether even high impact news will bring down the market or not. As I have repeatedly said, it’s impossible to gather all fundamental facts and come to a conclusion as to where the major indexes will be headed. Yes, a correction is long overdue, and it will most likely be an unanticipated event that pulls the markets off their lofty levels.
Until this actually happens, continue to follow the trends and keep your eye on your sell stop points. It simply does not pay to lose sleep over the day-to-day news events. My theme continues to be the same: Let the market tell you when it’s time to take action.