The May correction: Thursday's losses were good. Seriously.
The market may have sold off more after the Supreme Court's decision on universal healthcare today, but it was down anyways, says Joshua Brown. Spanish bond yields and Germany's employment numbers meant a risk-off day regardless.
Traders react at the New York Stock Exchange following the Supreme Court's decision on health care, June 28, 2012. Wall Street fell more than 1 percent on Thursday, with healthcare stocks trading erratically. But the Reformed Broker argues that the stock dip was less about health care, and more about a market trend that needs to correct itself. And soon.
Brendan McDermid/Reuters
Forget about this healthcare decision sideshow (okay don't totally forget about it, read about it here) - what happened yesterday is a realization that the May correction is still in progress, nothing from the first two weeks of June has really meant anything at all. The market may have sold off more after the decision but it was down anyway, Spanish bond yields above 7 and weakness from Germany's employment number was going to mean a risk-off day here regardless.
In terms of today, my traders point out the following:
The depths of the May weakness were met with complacency rather than panic, not enough fear at those lows set us up for a continuation of the correction. Especially compared to the panic from last fall.
You start getting closer to the washout you need when even the good stuff gets hit - have a peek at the utilities, even they can't catch a bid here. This is productive, believe it or not.
We're going to need a bit more fear and a lot more throwing out the good with the bad.