So it was only a blip… The question this past weekend was Friday’s sell-off a blip or the beginning of a correction? Concerns surrounding Egypt is being overshadowed by how strong corporate profits are and this mornings ISM report which indicated that the U.S. manufacturing sector expanded in January at its fastest pace in seven years. The Dow Jones Industrial Average and the S&P 500 index closed above their key psychological levels of 12000 and 1300 respectively. However, this bull would of preferred to see more of a healthier correction rather than just a one day sell-off. But what can you say when the hard data is increasingly positive both on the corporate front and now seemingly on the economic back drop as well.
The geopolitical climate is still something to be very cautious of especially if contagion were to occur in the Egyptian region. We could still be in for a more meaningful correction, but until then it seems like the old adages of “the trend is your friend” and “don’t fight the tape” are in full play.
All the best.