Running Into A Wall?

The markets appear to have hit a bit of a wall this past week.  Volatility has increased in the past 10 trading sessions.  More importantly in my eyes the most recent attempts at rallies have been met by traders selling into those sessions in the afternoons.  It's too soon to know whether this is just a minor pause or something more significant but I'd take note of a few things.

The business headlines are going to scream that the Dow Jones Industrials are down by over 200 points right after the open.  That's not quite the kick in the teeth it used to be.  The distance we've traveled in stock prices over the past few years means that it will take more points to move the needle on gains or losses on a percentage basis.  Our decline today at the open is actually under 1%.  No telling where that will end up by the close, but keep the percentages in mind not the points.

Markets had one of their best January's ever, being up something like nearly 6%.  Our pullbacks right now, even taking into account what stocks look like at the open represents something around 2% from our highs of a few days ago.

Most indices are up over 50% in the past two years.  Keep that in mind if we are going into some sort of corrective phase.  As hard as it is to believe we are actually working off a short-term over bought signal this week and longer term that has a potential to be healthy.

Finally know what you own.  If you're looking at your portfolio and starting to feel a bit queasy about things then make sure your asset allocation fits your current risk/reward profile.