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

Repositioning Before the Coming Selloff

If anything, the market's recent response to positive news reflects a new sentiment shift. A few months ago, economic reports were getting spun positively. Good GDP or employment data meant the economy was expanding; bad data implied that the Fed could stay accommodative and measured for a longer time. That sentiment is now shifting.

Bad data mean the economy is weak, while strong data will only hasten the eventual 50-basis point hike. For further clarification of this sentiment shift, I expect the market reaction to Friday's employment report to be revealing. Is good news bad, or is good news good? We'll find out soon enough.

Lastly, look at what's been occurring in the dollar, gold and oil. The countertrend rallies in these areas are of a short-term, corrective nature. They can run long enough to sucker in traders, but once they resume their prior trends -- dollar down, oil and gold up -- many players will get caught leaning the wrong way. They will be desperate to stop the pain and that will exacerbate the selling in equities.

Plan the Painful Path

So far, the high for the first half of the year was put into place on March 7, with the S&P 500 closing at 1229, and the Dow at 10,984. I suspect that we will not be able to power through those levels, a good 5% higher from yesterday's close. I further suspect a lot of people have been watching those numbers. If we fail there (or lower), here's how I see a likely scenario playing out.

The market won't simply collapse. That would be way too easy. Rather, we could get sandpapered to death, sliding a few days in a row, then rallying a day, on and on until the summer.
2 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
TLT $123.42 0.17%
GLD $111.86 0.49%
AIG $58.69 0.02%
BRK.A $198,578.00 -0.71%
GE $27.87 -0.78%


Chart of I:DJI
DOW 17,081.89 -49.97 -0.29%
S&P 500 2,014.89 +15.91 0.80%
NASDAQ 4,796.6090 -42.0340 -0.87%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs