- The market dropped because many stocks were fully valued. Many stocks have now corrected.
- Basic macros: GDP growth and normal yield curve are positives.
- Technicals have weakened but still appear to support the bull case.
- Investors should not panic and assess both fundamentals and technicals before changing their views significantly.
- The recent drop is an opportunity to get long.
The media and many investors went into panic mode as the market plunged after gapping down for three days in a row. I believe the correction was no surprise based on valuations. Technicals still remain bullish and have triggered a buy signal. See my previous article which shows the 2 simple yet powerful charts I use to look at the technical big picture.
At the end of July, in my free monthly letter, I said that:
…investors should reduce their potential profit expectations to say the least. This is not based on some theoretical model but on the fact that many stocks are fully valued.
To read the entire article go to: S&P 500 Still In A Bull Market