Thursday, July 3, 2008

This is Where Momentum Players Get Burned

This is the type of market where the momentum guys are getting crushed. Fears of lower demand for steel after GM's troubles have shaken steel stocks. Many have dropped 10-15% in the past few days. It's an overreaction, but who likes to hold through those types of drops. Same goes for speculative solar stocks, and agriculture stocks. When the fear is that the trend is over, the hedge funds holding these stocks get out, and quick.

The market is trading like a full on bear market now that we've reached the 20% drop. This is where investors start to throw in the towel, and sentiment drops even further. Subsequently, these are the best times to buy stocks. I can guarantee you that Warren Buffett is buying here.

A short trading day, and a short week. Enjoy the long weekend, and maybe do some homework, because there are some deals out there!

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