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Tuesday, April 9, 2013

Your Chance to Buy the Dip is Coming

President Obama speaking to Alcoa employees on...
(Photo credit: Wikipedia)
By Rude Awakening

New York, Apr.9, trading stocks .- After the markets close, Alcoa will probably drop an ugly number to kick off earnings season.

That’s its style. The stock is already deep into the red this year, pushing closer to multi-year lows with every passing week. Would a terrible earnings announcement really surprise you?

It’s no secret that Alcoa and disappointment have become an inseparable pair. But that won’t stop you and everyone else from jawing on about how bad earnings will crush the markets this month, sparking a nasty market crash.

How quickly you forget...

The market is -- in all likelihood -- anticipating a weak first quarter. That’s because most companies have already come out with crumby guidance. More than three-quarters of S&P 500 companies issued negative guidance, according to CBS News. It’s not new information. So until we see some really catastrophic misses, it will remain business as usual. Momentum has waned. But I doubt lumpy earnings will be the catalyst for a mammoth selloff.

You know that stocks have been locked in a tight back-and-forth for weeks. And everyone (yes, everyone) is expecting some sort of major push lower. That’s why they have no skin in the game. According to the American Association of Individual Investors, cash is king right now. Individual investors are sitting on their wallets -- causing cash allocations to rise to a 16-month high of 23%...

I told you last week that I wouldn’t be surprised if stocks started to drift downward this month. That’s not just some gut feeling. In fact, there’s plenty of data to back up the beginnings of a seasonal dip.

“Jonathan Krinsky, a technical analyst at Miller Tabak & Co., points out there have only been two years since 1980 in which the S&P 500 didn’t witness at least the beginning of a 5% correction by the first week of April,” reports The Wall Street Journal.

There it is -- the perfect opportunity to deploy some of that sidelined cash.

Here’s how it will play out for you...

Investors are skittish right now. Anyone who bought late in this rally will get sucked into all of this talk about a crash when the market leaks lower. Their shortsighted moves are your gain. Quit complaining and buy the dip. Hitch your horse to the big, safe stocks the market loves. You won’t regret it...
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