This Day On The Street
Continue to site
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

Late Rally Falls Just Short

Updated from 2 p.m.

It's easier to buy a correction than a mere dip.

The major stock market indices finally have had their long-awaited correction, marking a 10% decline from recent highs. And given that it's been four years since stocks have seen a move like this, some investors are feeling relieved.

Thursday's early selling brought the level of panic in the markets to new heights. The flight to quality trade is on in short-term Treasury bonds, as hedge funds liquidate stocks indiscriminately to meet investors' redemptions requests. The carnage is no longer at the margin or focused mostly on risky assets -- and that made Thursday an easier moment to be a buyer.

After falling as much as 343 points around midday, the Dow Jones Industrial Average stormed back in the last hour of trading to close down just 15 points. The S&P 500 briefly fell through its March low of 1374.12 before recovering to trade around 1400.

James Paulsen, chief investment officer at Wells Capital Management, says he added to his allocation to the financial sector this week. So far that's paying off. The Amex Securities Broker Dealer Index was rising Thursday even while the broader market was enduring a selloff. Paulsen is also bullish on cyclical industrials and basic materials sectors, which are also victims of the panic selling.

Still, a wild last hour that lapsed into selling before giving way to a late rally pointed out the risks that coming days will see more forced selling.

"If these guys [hedge funds] need to raise money, they can't sell their subprime loan paper," says Marc Pado, chief market analyst at Cantor Fitzgerald. "They sell what's liquid."
1 of 3

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Real Money

More than 30 investing pros with skin in the game give you actionable insight and investment ideas.

Product Features:
  • Access to Jim Cramer's daily blog
  • Intraday commentary and news
  • Real-time trading forums
Only $49.95
14-Days Free
14-Days Free
AA $10.35 -5.57%
GE $30.63 -0.84%
IBM $144.13 -0.78%
AAPL $95.18 1.64%
FB $117.43 -0.96%


Chart of I:DJI
DOW 17,750.91 -140.25 -0.78%
S&P 500 2,063.37 -18.06 -0.87%
NASDAQ 4,763.2240 -54.37 -1.13%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs