Here’s a nice quote from the Reitmester Trading Report at Zacks. (He’s the head of Zack’s by the way).
…why is this drop laughable?
Look no further than the economic data on tap Wednesday. ADP Employment showed 202K jobs added last month and this month rose to 213K. This proves the continued improvement of the jobs market.
Next up was ISM Manufacturing. The 56.6 reading was the 3rd best showing this year. If you went back 12, 18, 24, even 36 months to share both of these readings with investors they would be drooling over themselves with bullish giddiness. So yes, the previous month’s reading of 59.0 was higher…but it was not at a realistically sustainable level. Now we are just reverting to a more comfortable mean which still provides ample growth for the economy and corporate earnings and stock prices. By the way, the forward looking New Orders component is still red hot at 60.0. That reading foreshadows that manufacturing will be in growth mode for a lot longer.
Yes, stocks could go lower for a while just because irrational behavior has no specific expiration date. But looking out on the horizon, buying this dip will be the more profitable move than running for the hills like so many others…