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Profit from the Pros By Kevin Matras Executive Vice President
Stocks Down To Start Off Shortened Trading Week
Image: Bigstock
Stocks closed lower yesterday with all of the indexes in the red.
As it stands now, from the recent highs, the Dow is near 'pullback' territory with a -4.29% decline, while the S&P is now in 'pullback' territory with a -5.01% decline.
The Nasdaq is in 'correction' territory with a -10.5% decline.
A pullback is defined as a decline between -5% and -9.99%. Stocks usually pull back about -5% roughly 3-4 times per year.
A correction is defined as a decline between -10% to -19.99%. Stocks usually correct -10% on average about once a year.
These are common occurrences.
We saw roughly 3 pullbacks last year for the Dow and the S&P, all while the markets went up 18.7% and 26.9% respectively.
And the Nasdaq saw a correction last year while finishing up 21.4%.
Now the markets are at it again.
But these are the pauses that refresh before the next leg up.
And with a growing economy, a growing jobs market, and rising corporate profits, we're poised for another year of strong growth.
While pullbacks and corrections are never fun when they're happening, if you know these are commonplace moves, you can instead look at them as opportunities to buy rather than places to sell.
In other news, the Housing Market Index slipped to 83 from last month's 84 and views for the same. In spite of the slightly lower reading, 83 is a solid number.
Today we'll get another look at the housing market with MBA Mortgage Applications, the Housing Starts and Permits report, as well as a look at retail sales via the Redbook report.
And with earnings season having begun, we'll 44 companies reporting earnings today (and a total of 118 more by week's end). That number jumps to 543 next week. And then 656 the week after that.
Rough start to the week. And the year.
But since stocks usually go up during earnings season, the odds are good that we'll see the market shape up soon.
See you tomorrow,
Kevin Matras
Executive Vice President, Zacks Investment Research
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