Stock prices did indeed retreat, which was to be expected. Profit-taking by some investors is typical after stocks rise quickly and significantly, as they had the past few weeks.
Also driving the selling was the reality of continued negative economic news. Inflation still high, housing starts down, home sales down, manufacturing down, retail sales flat, and now more companies announcing staffing freezes or layoffs due to the recession.
Basically a forgettable “give back week” for us, with almost all stocks down. Institutional investors were not among the sellers, however, so very few exit trades for us (none in Level 1) despite the falling prices.
Price movements the next few weeks will reveal if last week was just a momentary pause in the rally or the start of another downtrend, and whether institutions were correct to buy at recent lows or acted prematurely.
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