The S&P 500 (^GSPC) is almost exactly flat for 2014 but the bull market is running out of gas. The Nasdaq has dropped more than 4% in the last three weeks. Former high-fliers like Facebook (FB) and Tesla (TSLA) have been destroyed since the beginning of March. It can be argued that a correction in the bubble names is healthy but markets seldom limit corrections to specific sectors.
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At this point even the bulls are wondering if now might be a good time to move some money to the sidelines. In the attached clip Hank Smith of Haverford says he’s optimistic about the market successfully digesting the gains of 2013 but volatility is here to stay.
“I think what we saw in the first six weeks is going to be indicative for the action of the rest of the year. We had a pullback in January of six or seven percent and if you didn’t have your finger on the trigger ready to buy immediately, that opportunity went away. That’s telling you investors want to get into this market and they are going to use pullbacks to do it, but don’t expect another 30% year like we had in 2013.”
That’s the most bullish case anyone is making on the Wall Street circuit. March is only going out like a lamb in the sense that aggressive investors are being chopped. If you’re one of those who likes to take the other side of conventional wisdom it’s time to start getting ready to buy stocks. For those of a more nervous constitution, now might be a good time to take gains off the table to make room for buying later this year.