Wednesday, February 28, 2007

Market drop buzz

What some notables are saying about the drop and rebound:

“From what I can tell, today’s bounce has an obligatory feel to it, with tech and financials begrudgingly higher,” wrote Todd Harrison of “The initial (out of the gate) probe lower was intuitive after yesterday’s carnage and, perhaps, this bounce is equally anticipated.”

"The selloff demonstrates somewhat starkly the inter-connectedness of stock markets around the world," said Hugh Johnson, chief strategist at ThomasLloyd Global Asset Management.

"I honestly think it's a tad of an overreaction to China and a tad of an overreaction to what happened to the U.S. durable goods orders," Hans Kunnen, at Colonial First State in Sydney, told Reuters.

From Bill King of Ramsey King Securities, who believes the market is headed lower: “You will hear ‘the economy remains healthy’ mantra often in the coming weeks,” he writes. “It always occurs after notable market declines. Sometimes this trite affirmation is correct. When it is wrong it’s very costly.”

Greg Ip, writing in the Wall Street Journal, notes the Street’s inability to leave behind Alan Greenspan, who some cited as one of the catalysts for the decline. “His comments appeared more aimed at questioning the conviction of many investors that because each of the last two expansions lasted a decade, this one, now five years old, will, too,”

This decline hasn’t even hit what investment strategist Ed Yardeni calls a “garden-variety correction,” which would be to drop back to the 200-day moving averages for the major indexes. (The Dow’s 200-day moving average sits at about 11800, so the index is about 3.5% above that level; the S&P 500 is about 3.8% above that average.) “If dropping back to the 200-dma is the worst case for the market from here, that’s not too bad,” he notes.


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