Our Feb. 21st Blog pointed to Resistance around the 25400’ish level and the market reached that level on Feb. 27th and has since turned downward. As this is being written, the market is currently down to 24300 and has been as low as 24230 this morning.
We see “support” on the Dow at current levels to the 24000’ish area. If these levels are violated to the downside, we will most likely see a re-test of the Feb. 9th low of 23400’ish and if you remember, the Feb 9th low was about a 10% correction (pullback) from the market’s all time high (26616) made on Jan 26th of this year.
Until we see more solid evidence to the contrary, we believe we remain in a “Bull” market (meaning pullbacks are great buying opportunities). Most analysts agree ( as do we) that a 10% correction is “healthy” for the market, given the tremendous move up we’ve had for the past several months. The good news is, once the market finds a “comfortable” bottom around these levels, the market could stage a tremendous move back to the upside and possibly go even higher than before.
What to do now?
For 401k participants with long term horizons (many years till retirement), not a lot, other than possibly shifting more to the large cap sector to help minimize account losses. For those with shorter time horizons or more risk adverse, you may wish to move into cash and some bond funds to “weather” this “storm”. Most certainly, we encourage you to contact our office for individual account advice.
For our other clients, be assured we are monitoring the markets minute by minute and will make appropriate recommendations to take advantage of major market turns when needed.
Stay tuned and check our web site for further updates.