Skip to main content

You Can Ignore the Crash Talk

If we hold Wednesday's initial pop through the end of the week, it will become difficult to get overly bearish.
Comments

Bulls don't really care about tapering, especially technology bulls. I'm hearing the same crash calls and naysayers saying the same thing we've heard for a decade now. Admittedly, I have my periods of concerns or times when I don't like the price action. Pretty sure everyone does. However, I refrain from calling crashes and declare Armageddon. For some people, that's "their thing," but I'm guessing none of them are making money from being correct on a continued wrong call.

When the day comes that they are "right," it may be at levels so far above their initial call that they remain underwater. You won't hear them admit to that though and that's actually okay. We need to hear all sides and all opinions. In the end, we're only competing against our own bottom line.

As far as the action from yesterday, the initial pop was interesting, but it is today where I put my focus. We're not really seeing a second day reversal after the late day Wednesday pop. That's impressive. It also goes against the thesis of fading the initial reaction. If we hold that initial pop through the end of the week, it will become difficult to get overly bearish.

The idea of tapering does make sense. Unit Labor Costs went through the roof based on this morning's 8.3% number while productivity was lower. I also thought these numbers would hold back stocks when combined with the idea of tapering. Just another reminder to watch the reaction rather than the headlines. Today is only one day though, so take it with a grain of salt. If we see support for a few more days, it will be really, really hard not to expect a huge Santa Claus rally and that's saying something when we're sitting at highs.

I'd add one last thing: crashes don't often come from a position of strength or highs. Yes, we can retrace or move lower but with major indexes at all-time highs, you can ignore the crash talk and simply use trailing stops or some out-of-the money put protection if equities begin to falter.

At the time of publication, Timothy Collins had no position in the securities mentioned.