Wall Streeters are still waiting for a drop in stocks to shake things up. They may wait for a while.
February 19, 2004: 9:00 AM EST
By Justin Lahart, CNN/Money senior writer
NEW YORK (CNN/Money) - The stock market correction that everybody keeps on expecting refuses to come. Maybe that's because everybody expects it.
Most traders think the occasional correction is a healthy thing for the market. Nothing like seeing the market get knocked down 5 percent or so to remind investors that it's possible to lose money in stocks. Otherwise, they get the crazy notion that the market isn't nearly as dangerous as it really is.
Worse, they get a little too cocky; like the old saw says, everybody is a genius in a bull market. There are signs this is happening.
Individual investors are piling into the market with abandon again. Wednesday Schwab said trading volume rose by 26 percent in January from December and was up by 62 percent from year ago levels. E*Trade Financial said online trading activity in January rose by 39 percent from where it was in December and that margin debt swelled by 9.7 percent.
Meanwhile, signs abound that investors have become increasingly speculative. Witness the stock of stun-gun maker Taser, which has risen 116 percent this year.
A nice little drop, then, would be a welcome occurrence, since it would put the fear of God in investors. And then strong hands could come in and buy again, and the market would reembark on its steady climb.
The thing about this little scenario, of course, is that if you believe in it, you have very little reason to sell, and if you have little reason to sell it's hard for the correction to ever get started.
"People are looking for something that isn't necessarily going to happen," said Tony Dwyer, equity market strategist at FTN Midwest Research. "They're making the assumption that things are going to turn negative and there's no evidence to support it."
In contrast to the ebullience of individual investors, Dwyer finds that institutional investors are more downbeat. His year-end target on the S&P 500 of 1,250 to 1,270, which he's in the midst of revising upwards, is viewed as extremely bullish.
"It's only a hundred points from here," he said. "You need to have multiple contraction and earnings disappointment not to get there, which is unlikely."
O Clubeinvest.com informa que nenhuma da informação
aqui facultada deverá ser entendida como conselho ou recomendação
de qualquer tipo de transacção ou investimento.
