"If you haven't sold already it's too late"
"Don't panic and sell"
"Buy the dip while others are panicking"
From my calculations, based on today's close, the S&P is only down 22 points or 1.7% since the Japanese earthquake hit. Even at its worst levels of the day it was only down 3.2% vs. Thursday's close. We've had bigger down days than that for less reason in the past.
Even prior to the earthquake the market was starting to look toppy and many of the market leaders' charts were starting to breakdown. We also still have that whole "Mideast thing" to deal with.
Add to these issues a massive earthquake, a tsunami, a Japanese stock market in free fall and a potential nuclear meltdown... and the result is a 2% correction in US stocks?
I think that investors are so conditioned to "buy the dip" that nobody actually sold anything to create a dip in the first place. Yet that didn't stop the the buyers from coming in and buying anyway.
So where does that leave us?
As far as I can figure it leaves us with a market that is more long today than it was just two days ago, and yet prices are only 1.7% lower.
It also leaves us with a market that is still both fundamentally and technically due for a significant correction.
So what will happen if/when the market corrects another 5-10% over the next few days or weeks? If the dip buyers already bought this week, will there be anyone left to buy the real dip when it comes? Even worse, will this week's dip buyers panic and sell during a real correction, causing the slide to worsen?
I can't help but think that the worst has yet to come...
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