Today was another horrible day in the market. The sell off was particularly steep as the closing bell neared. This was a sign that traders were reluctant to keep positions open over the weekend. Perhaps traders fear that more bad news will be forthcoming over the weekend.
The news of the downgrade at Bear Stearns by Standard & Poors appeared to have a negative impact on the market along with the weaker than expected employment numbers. The news of the Bear Stearns downgrade should really come as no surprise after the investment bank has closed two hedge funds and another is not allowing redemptions.
The market is down substantially over the past two weeks. Whether this is the much anticipated greater than 10% market correction or the beginning of a bear market remains to be seen.
One thing that the long term investor should bear in mind is that the market often overreacts both to negative news and positive news. This overreaction often presents the long term investor with buying opportunities when the market is down and a good point to take profits of the market has overreacted to good news should one be ready to sell.
Today's huge sell off as the market neared closing may present a buying opportunity as soon as next week.
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