Do Not Give Up
The selling today should not come as a surprise to anyone that regularly reads this blog or to anyone that is realistic when it comes to investing. After a 20% rally from the low on 10/4 through the high of last week, it would be unrealistic to believe that stocks were not due for a pullback at some point this week.
Even though the selling was exasperated late in the day, this is no reason to give up on stocks completely and throw in the towel. I believe the S&P 500 will find support in the 1230-1250 area and at the point investors can begin to scale into new positions. Due to the large number of hedge funds and individual investors that are out of the market at this time, all weakness should be met with some buying. This is the biggest factor as to why stocks should find support by the end of the week.
Still a Record Month
Even after a wave of selling overtook the markets today, the month of October is one of the best on record. The S&P 500 will close with its best month since 1987 and the Dow has its best month since 1982.
In the months following the January 1987 rally the S&P continued to move higher as did the Dow after its October 1982 surge. Based on history, big months have been the start of a rally that lasts a few more months. Just one more reason to look at the pullbacks as opportunities to buy at discounted prices.
ETFs for the Nervous Investor
If you disagree with me and feel the market will continue lower or if you would like to hedge your portfolio you must read this short article I wrote last week. It includes a few ETFs that will protect your portfolio during another pullback. The four ETFs were up on average 1.6% today.
Here is the link:
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